As you will be aware the Education Funding Agency (EFA) has introduced a voluntary Risk Protection Arrangement (RPA) for Academy Trusts, Multi Academy Trusts and free schools with effect from 1st September 2014.

The RPA will be at a cost of £25 per pupil which will be deducted from the Academies general annual grant (GAG) by the EFA.

Various timescales have been provided for Academies to opt into the RPA and as these are rapidly approaching, we have been asked for our views on the relative merits of joining or not and the issues to consider. Below are a number of points we feel are relevant to consider before making a decision;

• Risk Advice — The EFA are not acting as an insurer and will not be providing any insurance advice to Academies” As with any insurance, obtaining advice on covers, limits, excesses, exclusions etc is crucial in ensuring the correct cover is provided and understood and best suits the needs of the school. We feel this can only be done fully by employing an Independent advisor/Insurance Broker to ensure “best advice” is obtained
• Insurance Cover — The cover provided by the RPA specifically excludes a number of Risks that an Academy would normally require as standard. Although these can be purchased separately, we consider that arranging all covers through the same Insurer or broker would be more beneficial and would avoid any gaps in cover. The type of risks not provided by RPA include Motor, occasional business use, Minibuses, Engineering Insurance and inspection, certain school trips, Cyber Liability, Staff Absence and Employee Benefits
• RPA Insurance Cover — the membership rules which provide the extent of the cover, have only just been issued in June 2014. Upon analysing the document we feel it important to raise the following points;
  • Cover — The rules are newly drafted and appear to contain anomalies and uncertainties with regards to the extent of cover. Deficiencies are too numerous to mention
  • Costs — Whilst the inception premium is £25 per pupil, the Insurance market in general feels it to be under priced. Should this prove to be the case, significant increases can be considered likely in subsequent years, or the scheme may be short lived
  • Employers Liability, Leases and Trustees — A number of covers such as these have requirements that Insurance cover is in place. As the RPA offering is not an actual Insurance policy, this could potentially have implications going forward
• Claims - With the RPA, claims will be dealt with by a Third Party Administrator. They will deal direct with the Academy once a claim form has been received. Although this hasn’t been tested yet, we feel the following needs to be considered;
  • What happens in the event of a major incident or complex claim?
  • As this is not an Insurance contract, the claims paid through the Administrator can be discretionary. This could lead to potential issues if claims are not paid. Under an Insurance policy any appeal can be made to The Financial Ombudsman Service. It is unclear if there is an Independent Appeal process under the RPA.
  • The RPA rules refer to claims dealt with by the Administrator being paid on account. It is unclear if that means the academy must foot the cost of a claim prior to being reimbursed. If this is the case, this can lead to potential issues with cash flow for the larger claims
• Health & Safety & Risk Management - This is obviously a key area for Academy and school environment to get right. This can also has a huge impact on the level of Insurance premiums paid, as by having a fully robust system in place can reduce the number or size of claims paid. Once again we believe a hands on approach to this is best suited and will provide the best advice. The Insurer/Broker would be best placed to provide this Independent guidance

We are happy to discuss any of the points raised above or any queries you may have with regards to Insurances and Risk Management for Academies or Schools.

For more information please contact Richard Twigger, Jelf Insurance Partnership, on 01482 388588.