Content

RESOLVED:
To agree the award of the leasehold
buildings insurance contract to Insurer A for a period of 3 years
(with provision to extend for 2 years) following a 30 day statutory
consultation with leaseholders.
 
Reasons For Decision
 
5.1  The Council has a
legal requirement to procure and maintain a contract of insurance
for both its own and leaseholders' interest in leasehold property
acquired under the Right To Buy or similar legislation.
 
5.2  As part of our
standard terms of lease the lessor (the Council) has a duty to
arrange building insurance for the block, including the demised
premises.
 
Following a Tender exercise, an annually renewable
Insurance Contract was incepted with Avid from 1st April 2022 which
formed part of a three year Long Term Agreement with the option to
extend for a further two years.
 
However, the successful insurance agent, Avid, provided
notice, in early 2023, that from the date of renewal they would no
longer be able to fulfil the contract due to the termination of the
contractual agreement with Accelerant, who provided Avid’s underwriting capacity. Consequently
the policy contract with Avid ended on 31st March 2023 and the
Council sought an alternative insurer, on an emergency one-year
basis, to meet its legal obligation.
 
The one year policy was placed with Protector and is due to
expire on 31st March 2024.
 
5.3  Having sufficient
insurance cover is a risk transfer mechanism for the Council
without which it would have to meet the cost of any claims and
would effectively be in breach of its lease obligations as a
landlord.
 
5.4  The full premium is
recharged to leaseholders via the existing service charge process
managed by Hackney Housing. Purchasing the insurance via a market
exercise ensures that the Council can demonstrate that it is
seeking to procure the policy on the best available
terms.
 
5.5  Terms have been
sought on cover no less comprehensive than those currently in
place.  Where it was felt appropriate,
based on the claims experience and observations from stakeholders,
improvements to the cover provided were requested.
 
Alternative Options (Considered and
Rejected)
 
5.7  There are currently
no feasible alternative options available to the
Council.
 
5.8  Undertaking a full
open procurement process was considered the only viable option
available to the Council in order to ensure it continued to meet
its contractual liabilities from 1 April 2024 and to ensure
qualifying leaseholders retained, unbroken, the financial security
provided by an appropriate policy.
 
5.9 
Self-Insurance
To completely self-insure the assets and liabilities would
create unmanageable levels of uncertainty and financial
risk.  It would demand the retention of
financial provision(s) substantially over and above the cost of
insurance premiums.
 
5.10  Alternative
Insurance Models
The Council’s Insurance Services team and broker,
Marsh, continue to review alternative models in the context of the
hardening market.