UMAL warns of likely upward trend for commercial insurance costs

The precursors to hardening insurance rates are amassing warned Allan Guest, Chairman of UMAL at the Conference on University Purchasing (COUP) on 7 September.

“Over the last 12 months the global insurance industry has faced a catalogue of catastrophe losses from earthquake and tsunami to severe weather and floods estimated in excess of £60 billion,” he said. “The cost of the disturbances in theUK alone is expected to exceed £750 million.”

Increases in pricing are inevitable; the rises in motor insurance over the last year - up to 40% in some cases – further support this, stated Mr Guest. He also pointed to the need for transparency of costs to ensure that all fees and commissions are appropriately disclosed and are a part of any evaluation criteria.

To mitigate these pressures, universities are best served by sharing their insurance risks through membership of a mutual such as UMAL, claimed Mr Guest, former CEO of Mitsui Sumitomo Insurance,Europe. UMAL and its sister UMSR share claims using the traditional ‘premiums’ of their member universities and colleges, with larger liabilities placed in the insurance market.

This model means that UMAL and UMSR are less exposed to external global claims than commercial insurers. In addition to favourable pricing this allows both organisations to return annual surpluses to their members while maintaining a healthy reserve. Nearly £20 million has been reimbursed in this way since they were founded in 1993, although university procurement procedures are often unable to take account of this unique advantage. Being owned and controlled by the members reduces operational costs significantly.

At the same event Susan Wilkinson, UMAL’s Director, demonstrated that a ruling by the Supreme Court in February means that HE Institutions can avoid another cost, the tendering process itself. The decision, over insurance through a local authority mutual LAML, was based on European law, and stated that members of this kind of mutual did not have to competitively tender for insurance.

ENDS

Notes for editors

For further information please contact:-

Henry Creagh or Charles Macdowell

Kendalls

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Or email charles.macdowell@kendallscom.co.uk or henry.creagh@kendallscom.co.uk

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