LGIS Scheme expansion – fleet protection

Risk Matters - Autumn 2021

We are pleased to announce the continued transition of LGIS fleet protection across from traditional insurance placements to Scheme protection arrangements.

In 2019, the WALGA State Council included the recommended strategy of “transitioning additional covers currently provided by the LGIS broking service into the mutual Scheme” in its resolutions.

In 2020, the Scheme completed phase 1 of this long-term transition, by offering protection across a number of types of coverage (e.g. Motor, Journey, Commercial Crime and Cyber, Personal Accident etc.), and therefore all the benefits your Scheme provides.

LGIS fleet protection

The motor portfolio protects approximately $780 million of fleet and plant assets across all Scheme members. Sixty eight percent of assets within the portfolio sit in regional WA and contribute 50% of the losses incurred. Metropolitan local governments make up the remaining 32% of assets and also contribute 50% to loss history.

Losses are typically driven by ‘own fault’ type claims, with 70% of the costs incurred by metropolitan local governments attributable to driver error, and further evidenced by the low third party recoveries, of which only 10% of total are incurred.

The stability in the portfolio has assisted the Scheme in offering members the benefit of a fully funded motor protection. The Scheme will carry a significant portion of the risk, minimising its cost of indemnity cover and releasing the benefits of Scheme arrangements back to members.

The model will provide the Scheme flexibility to provide further pricing stability, in an environment where cost escalation is in focus.

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Claims management

Members will be pleased to hear that LGIS will take control of the claims process and decision making. It is here that your Scheme distinguishes itself from traditional insurance. Transitioning your fleet protection across to the Scheme means your claims are handled by our local claims consultants and gives you the benefit of a single point of access for claims.

The objective of the LGIS team is to provide advice, guidance and management of claims to reduce downtime, potential liability exposures, and claims costs by prompt identification and processing.

From 30 June, all motor claims can be lodged at [email protected]

Risk management

Your LGIS Scheme has been successful on the back of strong risk management practice. Fleet risk (including privately used vehicles for Council purpose) accounts for over $700M in assets, and there are certainly areas for improvement in implementing risk management around fleet policy.

Many local governments are not as risk aware in this space as they could be, and may consider procurement policy and driver access control adequate, these processes do little to influence driver behaviour.

LGIS will be implementing a risk gap analysis program which will provide members with an overview and score of their fleet risk programs. The assessment will include a review of areas such as:

  • Depot aggregation of assets
  • Heavy equipment configuration – visibility/ergonomics/fire suppression
  • Pre-start (including fatigue management)
  • Fleet policy on purchase of vehicle (ANCAP 7 rating)
  • Change in vehicle appetite (is there a move for more hybrid engines?)
  • Opportunities for behaviour (driver education) training
  • The use of engineered solutions – cameras/alarms /e-driver training modules.

A recent survey undertaken by WALGA for the High Occupancy Vehicle Survey Report, reported only 19 councils (of 33) had a fleet policy. Apart from potential physical loss, workers’ compensation, and loss of utility, a vehicle is a workplace for a large number of local government workers which equates to a WHS legislative exposure – highlighting the opportunity for work in this area.

The below table shows the historical experience of the motor insurance portfolio, from 2013 – 2020, indicating that members will benefit from risk management processes to reduce member-fault claims.

Incurred split cost by fault

Member benefits

  • Surplus retained by LGISWA – larger claims surplus returned to members
  • Access to scheme risk services focused on motor
  • Local claims consultants dedicated to local government
  • Better opportunity to apply discretionary claims philosophy
  • Limit impact of market cycles on the member
  • Opportunity to build and support local procurement policy
  • Freedom to develop and enhance product innovation

Fleet protection is most likely the fourth highest expense in a Member’s total Scheme contribution expenditure. The Board’s decision to pursue this model will provide for the expansion of a Scheme that has served the sector through over $58 million in returns and opportunity to ensure members continue to be protected in uncertain times.

For more information, please contact your LGIS member services account manager or Andrew Grieg on 9483 8867.

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