Increased Insurance Premiums in 2020: Allocation from General Reserve

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A decision made on 25 September 2020

Decision Reference: MD-TR-2020-0120
Decision Summary Title:	Allocation from General Reserve for increased insurance premiums in 2020		Date of Decision Summary:	23rd September 2020
Decision Summary Author:	Specialist – Business Cases		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Allocation from General Reserve for increased insurance premiums in 2020		Date of Written Report:	23rd September 2020
Written Report Author:	Specialist – Business Cases		Written Report: Public or Exempt?	Public
Subject: Allocation of up to £2,194,000 in 2020 from the General Reserve to the Treasury and Exchequer (T&E) head of expenditure to fund increased insurance premiums.
Decision(s): The Minister approved an allocation of up to £2,194,000 in 2020 from the General Reserve to the Treasury and Exchequer (T&E) head of expenditure to fund increased insurance premiums.
Reason(s) for Decision: Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan. The current Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources (published as R.80/2020) sets the requirement that all proposed allocations from the General Reserve are to be considered by the Investment Appraisal Team (IAT) Upon recommendation from the IAT, the Treasurer of the States will decide whether to recommend, seeking comments from the Principal Accountable Officer (PAO) prior to submission, to the Minister for approval. Where a request for funding is made by T&E, the Treasurer will declare a conflict of interest and will ask the PAO if he will recommend the request to the Minister for Treasury & Resources. The Minister for Treasury and Resources, if minded to approve a funding allocation, will circulate the draft Ministerial Decision to the OneGov Political Oversight Group (OGPOG) and Council of Ministers 5 working days before it is signed. The IAT has recommended this request for approval and further to these reviews the PAO recommends this allocation to the Minister for approval. OGPOG and the Council of Ministers have been consulted.
Resource Implications: The General Reserve head of expenditure to reduce by up to £2,194,000 in 2020 and the T&E head of expenditure to increase by an identical amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2020-2023. The full business case has been submitted for future financial implications for inclusion in the Government Plan 2021-2024.
Action required: The Head of Financial Governance to advise the Head of Finance Business Partnering – T&E that this decision is approved.
Signature:		Position: Deputy Susie Pinel Minister for Treasury and Resources
Date Signed:		Date of Decision:

Increased Insurance Premiums in 2020: Allocation from General Reserve

Treasury and Exchequer

Ministerial Decision Report

Allocation from General Reserve for increased insurance premiums in 2020

Purpose of Report

To enable the Minister to approve the allocation of up to £2,194,000 in 2020 from the General Reserve to the Treasury and Exchequer (T&E) head of expenditure to fund increased insurance premiums.

Background

The Government is required to maintain adequate insurance cover to manage some of the many risks it faces across the island. In addition to its own insurance needs the Government also provides cover through its policies for a number of the States Owned Entities; Arm’s Length Organisations and a range of other related bodies. The Government has never had a formal insurance strategy. Given the challenges currently being seen in the insurance market place the Risk and Audit department have drafted an insurance strategy which has as one of its main aims the need to identify the most cost efficient and effective insurance programme.

The general and medical malpractice policies were both subject to re-tender during 2019 and early 2020 as part of the regular three-year strategy. General insurance was re-tendered at the end of September 2019 and the medical malpractice insurance at the end of January 2020. The results of these tender exercises identified a significant increase in premiums that had not been forecast as part of the Government Plan process.

The full business case for future years financial implications has been received for inclusion in the Government Plan 2021-2024.

Recommendation

The Minister is recommended to approve the allocation of up to £2,194,000 in 2020 from the General Reserve to the Treasury and Exchequer (T&E) head of expenditure to fund increased insurance premiums.

Reasons for Decision

Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.

The current Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources (published as R.80/2020) sets the requirement that all proposed allocations from the General Reserve are to be considered by the Investment Appraisal Team (IAT) Upon recommendation from the IAT, the Treasurer of the States will decide whether to recommend, seeking comments from the Principal Accountable Officer (PAO) prior to submission, to the Minister for approval. Where a request for funding is made by T&E, the Treasurer will declare a conflict of interest and will ask the PAO if he will recommend the request to the Minister for Treasury & Resources. The Minister for Treasury and Resources, if minded to approve a funding allocation, will circulate the draft Ministerial Decision to the OneGov Political Oversight Group (OGPOG) and Council of Ministers 5 working days before it is signed.

The IAT has recommended this request for approval and further to these reviews the PAO recommends this allocation to the Minister for approval. OGPOG and Council of Ministers have been consulted.

5. Resource Implications

The General Reserve head of expenditure to reduce by up to £2,194,000 in 2020 and the T&E head of expenditure to increase by an identical amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2020-2023.

Report author: Specialist – Business Cases	Document date : 23rd September 2020
Quality Assurance / Review: Group Director, Strategic Finance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0120 - Reserve funding for Insurance Premiums
MD sponsor: Treasurer of the States