Council saves big on insurance premiums

RICHMOND Valley Council has saved its ratepayers almost $30,000 next year by undertaking an open and transparent tender process for its insurance premiums.

Councillors recently voted to accept a tender from Civic Risk Mutual to provide insurance services for the next three years.

Presently, Council pays $506,627 in premiums, which will reduce next year to $476,885 – a saving of $29,742.

Richmond Valley, along with Gunnedah Shire, Mid-Western Regional, Parkes Shire and Snowy Monaro Regional councils, sought the services of Local Government Procurement to facilitate a new tender process for insurance-related services.

Richmond Valley Council’s General Manager Vaughan Macdonald said open tenders delivered a greater level of information to councils, as well as transparency.

Mr Macdonald said an open tender gave Richmond Valley Council a better understanding of its insurance arrangements, including the quality and extent of its cover, and the comparable prices on offer.

He said Council needed to assess whether it was achieving value for money when  buying insurance; not only getting the lowest possible premiums but also ensuring appropriate coverage.

“Council historically relied on the same broker to test the market each year, which recommended similar insurance options year on year,” Mr Macdonald said.

“After too many years of sticking with the one broker, in 2017 Richmond Valley Council put its insurance out to tender, and obtained a saving of 53 per cent on the premium it was previously paying.

“For that year alone, the saving was $300,000, and it had been going on for many years.

“Council would like to thank Aon Insurance Brokers, which has provided services for the past three years and played a big part in shaking up the competitiveness in the NSW Local Government insurance market, which has benefited every council and community in NSW.”

Richmond Valley Council is the lead plaintiff in a class action against multinational insurance broker Jardine Lloyd Thompson Pty Ltd (JLT), alleging it has been paying excessive insurance premiums for many years.

Mr Macdonald said Richmond Valley Council did not take this action lightly. However, he said leadership on this issue was necessary for the benefit of ratepayers.

“In leading this action, I’m confident we will be joined by many more councils in NSW who face the same financial challenges we do to remain sustainable in providing services and infrastructure for our communities,” he said.

“Given the current economic impacts of the COVID-19 pandemic, these funds being returned to councils will be more important than ever for communities when the recovery commences.

“We simply want JLT’s millions of dollars of ‘super-profits’, which have been generated over at least a 10-year period, to be returned to ratepayers, so that it can be rightly invested into much needed local infrastructure across the Richmond Valley local government area.”

The matter is next before the Court on Friday 3 July.

The class action is funded by leading global litigation funders Harbour Fund III LP, with legal services provided by Sydney-based law firm Quinn Emanuel Urquhart & Sullivan.

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