Insurance – Follow Up

A key tool for the mitigation of risks faced by an organisation is the use of insurance. The States of Jersey use both external insurance and self-insurance to mitigate risk. The insurance function is administered by a small team supported by external brokers and advisors.

Background

For self-insurance purposes the States operate an Insurance Fund. This facilitates the provision of mutual insurance arrangements for:

• States Bodies
• any fund or money for which an Accountable Officer is appointed; and
• any other bodies and persons that the Minister for Treasury and Resources may agree.

The Insurance Fund is funded from the Consolidated Fund with amounts as decided in the Government Plan, recharged to bodies or persons that participate in the mutual insurance arrangements, and received from settlements in insurable claims.

Exhibit 1 shows the Insurance Fund net asset value from 2019 to 2024.

For external insurance the States contract with insurance brokers and insurers to obtain insurance cover from the commercial insurance markets. Cover falls into two main areas: General Insurance (property and business interruption insurance, liability insurance and motor insurance) and specialist Medical Malpractice cover.

In April 2020, the C&AG issued a Report, Insurance, on the arrangements in place at that point. The report considered the States’ approach to:

• ensuring effective arrangements for governance and oversight
• identifying and quantifying risks that might have financial consequences
• developing a clear policy for insurance and self-insurance; and
• ensuring appropriate arrangements to identify and manage insurance claims. 

Scope

The audit has followed up on the 2020 Report and recommendations. In the context of current insurance risks and opportunities, it has assessed:

• the progress made in implementing agreed recommendations from the 2020 Report
• the extent to which the recommendations as implemented have addressed the improvement areas identified in the 2020 Report; and
• the adequacy of plans for the implementation of any outstanding recommendations.

In doing so, this audit has evaluated:

• the effectiveness of the States’ overall policy and strategy for the identification, quantification, oversight and management of insurance risks and cover
• the effectiveness of the response to potential additional claims, including to mitigate future risk; and
• the effectiveness of policy and strategy in optimising insurance arrangements for:
  • a sample of self-insurance plans; and
  • a sample of external insurance plans, in relation to both General Insurance and Medical Malpractice.

The report is structured into areas examined as part of the audit, as set out in Exhibit 2.

The audit did not extend to:

• a follow up of the recommendations made in previous reports on risk management
• the detailed insurance arrangements in place within States controlled entities; and
• the operation of the Health Insurance Fund: the C&AG published a separate report on the Health Insurance Fund in February 2026.

Conclusions

The 2020 Report made 15 recommendations, with the Government response indicating that actions were planned to be implemented over a period from July to December 2020.  In following up these recommendations, the C&AG has concluded that:

• six are fully implemented
• seven are partly implemented; and
• two have not been started.

The States of Jersey have improved governance and oversight of the insurance function since the 2020 Report. A specialist insurance advisory firm was selected in 2023 to comprehensively review the States of Jersey’s risk and insurance governance. In addition, the review helped inform a risk and insurance strategic approach and in the development of a three-year implementation plan with actions to achieve the desired strategic goals.

Following her appointment in May 2023, the Head of Insurance used the results from this review to develop a Risk and Insurance Strategy which received Ministerial approval in late 2023. There is now a need to prioritise and deliver ongoing strategic improvements through bringing together the actions in the Insurance Strategy Tracker and the C&AG’s recommendations into one workstream, with appropriate implementation dates.

There is a good level of engagement between the Insurance and Risk teams. However, there has been limited progress in implementing the recommendations from the report in 2020 to strengthen processes to identity and assess risks. Actions remain ongoing in relation to:

• identifying and documenting existing and emerging insurable risks
• more efficient and effective analysis of claims data; and
• setting out how insurance risk appetite is derived from the States’ overall risk appetite.

The States of Jersey have implemented three of the four previous recommendations regarding insurance programme design and procurement. Following the recent tender exercise for General Insurance, the States secured an improved level of cover for a reduced premium. In 2024 the General Insurance renewal premium was £8.6 million. Following the tender procurement, the figure fell to £6.2 million in the areas tendered.

New insurers were appointed to spread the risk associated with a single provider. The tender also led to enhanced insurance cover across all insurance lines, for example addressing the identified risk of under insurance of the energy recovery facility, and leading to a reduced excess on property insurance, which reduces the pressure on the Insurance Fund.

Insurance cover for Medical Malpractice remains more challenging due to the level and complexity of claims. The most recent renewal led to an increase in premium costs whilst maintaining continuity of cover. Further work is required to address the C&AG recommendation to establish and set out future policies for insurance, self-insurance and the arrangements for funding.

There has been some improvement in the States of Jersey oversight of claims handling through the development of claims protocol guides and service level agreements which are monitored regularly. These provide an improved mechanism through which to identify key issues and areas where action is potentially required. However, the action to review claims handling arrangements, due to be completed by December 2020 in response to a previous recommendation, remains outstanding. It is included as an action to take forward once a decision has been taken on whether to procure and implement an insurance management system.

There has been limited progress on the implementation of previous recommendations in relation to monitoring, reporting and continuous improvement. A delay in finalising the decision on whether or not to procure an insurance management system has impacted on the proposed review to improve management information on insurance claims. As a consequence, the States of Jersey do not have easily accessible data on which to take preventative action. Such action might reduce the incidence and / or impact of events that in the past have led to claims.

Conclusion

The States have made progress with a number of the recommendations made in 2020 to improve their approach, particularly in the governance and oversight of insurance arrangements, and in the recent procurement of insurance cover which reduced the overall cost of the General Insurance premium whilst improving the level of cover and reducing the risk associated with having only one provider.

However, the States of Jersey need to prioritise and deliver strategic improvements through bringing together the actions in the Insurance Strategy Tracker and C&AG recommendations into one workstream, with appropriate implementation dates. Further work is required to improve the links between insurance risk and risk appetite, including identifying and documenting existing and emerging insurable risks, and establishing more efficient and effective analysis of claims data to better manage insurance risk.