Bromley Council is preparing to renew its insurance contract, a significant financial commitment valued at approximately £10.7 million over an eight-year period. The current insurance policies are set to expire on April 30, 2027, prompting the council to initiate a re-tendering process. The proposed new contract would span five years, with an option for a further three-year extension.
The Executive of Bromley Council met on June 24, 2026, to discuss the re-tendering of these essential insurance policies. The estimated annual cost for these policies is £1.2 million, with the total estimated value over the potential eight-year term reaching £10.7 million, factoring in an annual inflation allowance of 3%. This estimate is based on the current annual cost plus an allowance for a 3% annual inflation increase, a standard practice to provide a more realistic projection of future costs in a variable market. However, the premium cost is difficult to estimate accurately due to dependence on the variable insurance market, the Council's claims history, and changes in insurance requirements.
Councillor Kate Lymer, Deputy Leader of the Council and Portfolio Holder for Resources, Commissioning and Contracts Management, was involved in the discussions regarding the insurance contract renewal. The Executive was presented with three options for consideration: re-tendering only statutory policies, a hybrid approach, or re-tendering all current policies. The recommended option was to re-tender all current policies to ensure comprehensive indemnity for various risks and avoid significant financial exposure.
Understanding the Risks and Costs
The current insurance policies cover a range of risks essential for the council's operations. These include:
- Employers' Liability: Legally required insurance for personal injury during employment.
- Public Liability: Covers risks of personal injury and property damage due to Council negligence.
- Professional & Officials Indemnity: Covers financial negligence claims for employees performing professional and statutory duties.
- Motor: Legally required insurance for the Council's fleet vehicles, minibuses, and staff leased cars.
- Property: Covers damage to Council properties, including loss of rental income and business interruption.
- Terrorism: Covers acts of terrorism or sabotage for properties.
- Personal Accident & Travel: Group benefit for employees injured at work or travelling overseas for the Council.
- Fidelity Guarantee: Covers losses due to employee fraud.
- School Journey Insurance: Group travel policy for children's services trips.
The council receives around 400-450 insurance claims per year, with approximately 80% relating to Public Liability claims, predominantly for Council highways and trees. The Grenfell Tower incident serves as a stark reminder of the significant impact of a total loss of a building due to fire, highlighting the potential financial risk to the Council if property and terrorism insurance policies were not in place.
Evaluating Re-tendering Options
Three options were presented to the Executive:
- Option 1 (Only re-tender statutory policies): This would involve re-tendering only Employers' Liability and Motor policies, with an estimated annual cost of £149,000 (£92k for Employers' Liability and £57k for Motor). This option could represent a potential annual revenue saving of £1.05 million on insurance policy costs. However, it carries the significant risk of the Council having to self-fund claims for Public Liability (highways and trees), property damage (e.g., a fire at Churchill Court with a reinstatement value of £138m and £10m for business interruption), or terrorism.
- Option 2 (Hybrid approach): This involves re-tendering statutory policies and any combination of optional policies. The potential annual revenue saving could range from £1,000 to £1.042 million. Similar to Option 1, this option carries financial risk if optional policies are not re-tendered, requiring the Council to self-fund claims.
- Option 3 (Re-tender all current policies): The estimated annual premium cost for all current policies is £1.191 million. This option provides comprehensive indemnity for various risks up to the policy limits and protects the Council from catastrophic financial loss. While it is the most expensive in terms of policy cost, it is recommended as it provides the Council with indemnity for all risks and avoids significant financial exposure, balancing premiums paid with internal self-insurance arrangements from the Insurance Fund.
Decision-Making and Future Steps
Delegation of a decision on appropriate excess and stop-loss levels has been requested for the Director of Finance, in consultation with the Portfolio Holder. This decision will be made following an actuarial review of the Insurance Fund, which will consider whether excess and/or stop-loss levels can be increased to potentially reduce premium costs while managing risk within the Council's existing Fund. The Council's claims history will also be a key consideration in this review.
The anticipated process and timeline for the re-tendering of insurance policies is as follows:
- Permission to commence tendering: June 2026
- Issue tender to Market: 14th October 2026
- Last date for submission of tender responses: 30th November 2026
- Evaluate Tenders: 1st - 11th December 2026
- Executive decision to award: 10th February 2027
- Standstill / Call-in Period: (Duration not specified)
- Contract Award: 15th March 2027
- Policy Commencement: 1st May 2027
Further details on the council's insurance strategy can be found in the Public reports pack Wednesday 24 June 2026 Executive and the Agenda frontsheet Wednesday 24 June 2026 Executive.