To receive a verbal update on the LPB insurance cover.
Minutes:
Richard Bullen, Fund Governance and Performance Manager, delivered a verbal update on the Local Pension Board insurance cover.
It was noted that the Board’s insurance arrangement was put in place to protect the Board against certain claims and that this was due for renewal on 9 October 2020. Officers confirmed that they were liaising with insurance providers on the insurable interest and premium amounts, which were £2,500 plus VAT but it was noted that this would increase to £2,850 plus VAT, including commission.
Officers highlighted that the Scheme Advisory Board (SAB) was approached with regard to the need for insurance as the Local Government Association (LGA) had provided advice in the past and officers wanted to check that this legal advice had been updated with regard to Local Pension Board insurance requirements. It was noted that past advice stated insurance should be in place, but that this was during the inception of Local Pension Boards as there was uncertainty on how Boards would establish themselves. Officers had been informed by the SAB that the topic would be discussed in a meeting at the beginning of October 2020, with a subsequent survey intended to be circulated to all Boards for feedback. It was noted that officers were working alongside the Wiltshire Council insurance team and were exploring alternative providers to attain a more competitive insurance policy for the Board. Additionally, officers noted that the existing insurance provider had been approached to glean some more details surrounding their claims experience, but it could not be obtained as it was deemed commercially sensitive. Members were informed that the provider had offered an extension for the Board to allow for a decision to be made on how best to proceed.
The Chairman noted that the previous Chairman of the Board had felt insurance was needed to protect against the risk to members but that he felt that there was not an insurable risk due to the nature of the Board being a non-decision-making body. However, the Chairman noted his reluctance to terminate the cover as he felt it was inappropriate to do so unless all members of the Board agreed. It was noted that more information was needed before a final decision could be made. Officers noted that they had written to the Wiltshire Council Corporate Leadership Team and had asked for guidance on the matter and whether it was possible for a level of assurance to be provided to the Board to ensure that no action would be taken against them under any circumstances.
Members of the Board questioned an alternative route by contacting other Local Pension Boards to query if they had experienced similar issues. Officers noted that this had been done on an informal basis but that the majority of feedback had confirmed that many other Boards did not have insurance in place. Members explored the idea of not renewing the insurance cover but also discussed the adoption of a more cautious approach to not withdraw the insurance without hearing a response back from Wiltshire Council as to some assurance surrounding the wider cover, if that would include the Board, and a statement affirming that no action would be taken against the Board.
The Chairman agreed with the cautious approach and suggested that if the assurance was not able to be obtained within the renewal extension period, then the Board should consider committing to insurance cover for one year to determine the level of risk, thus allowing for a more informed decision. Officers noted the length of time until the next meeting of the Board and suggested a conditional style recommendation that would enable to officers to communicate and take action before the next meeting. The Chairman agreed with the addition of the conditional recommendation and asked if any members of the Board did not support, to which one member of the Board expressed unease to go ahead with such if the explicit assurance desired was not provided. Said member suggested an amendment to the recommendation that stated that in the event that no assurance was forthcoming, the Board would again review the need for insurance. Officers stated that the assurance was likely to be obtained but that the cover under Wiltshire Council’s existing insurance had been checked and confirmed that the Board would not be eligible for cover under the Council’s wider insurance due to the limited inclusion of pension areas in general and the separation of the Board and the Council.
The Chairman stated that he did not want any of the discussions to lead Board members feeling that they were not content to continue on the Board without insurance. Therefore, it was:
Resolved
The Board recommended to extend the insurance cover for one year and to seek written assurances from Wiltshire Council and to await the updated SAB advice before deciding to withdraw or extend the insurance policy. In the event that no assurance was obtained, a further review on the need for insurance would be undertaken.