Innovative self insurance deal delivers savings
Affinity Sutton and Acumus team up to deliver insurance
- Affinity Sutton among first in sector to adopt innovative
protected cell captive arrangement.
- Deal forecast to deliver average savings of about £250,000
- Risk successfully managed with claims above £90K covered by
third party insurers.
Acumus, the sector-specialist insurance broker
has launched an innovative off-shore captive insurance arrangement,
and national affordable housing provider Affinity Sutton is the
first housing association to join up.
The pioneering value for money measure – a
first for the sector – will see Affinity Sutton insure through the
Guernsey-based insurance vehicle, Igloo Insurance PCC
Limited. High level claims will be covered by a third party
Both South East London based Gallions Housing
Association and RCT Homes in Wales are also set to sign captive
agreements with Igloo.
The arrangements are structured through a
corporate structure called a protected cell company. Captive
insurance is essentially an “in-house” insurance company with a
limited purpose and is not available to the general public.
Premiums are paid into a “cell” to cover the likely cost of all
routine claims with a cap on losses for any individual claims and
as well as accumulated yearly loss. Reinsurance is purchased
to cover against large single and aggregate losses.
The captive model is widely used by UK PLCs
such as Tesco and Marks & Spencer as well as some public sector
bodies including Transport for London and the Corporation of
The arrangement will see Affinity Sutton
benefit from an expected reduction in insurance costs over time and
have access to expertise to assist with the improved management of
risk and risk mitigation.
The arrangement will also provide:
- Long term stability - protection from market upward price
movements or shocks.
- Savings as a result of risk management, improved claims
management (or even good fortune) are gained by the captive/cell
owners not insurers.
Mark Washer, Group Finance Director for
Affinity Sutton, said: “Our groundbreaking agreement with
Igloo Insurance PCC Limited is an important tool to keep the
business focussed on managing its major risks, and represents
another significant milestone in delivering efficiencies. As a
business for social purpose, Affinity Sutton is committed to being
an efficient organisation and delivering a value for money service
to our customers. This arrangement is a clear
illustration of how we will deliver value for money by
concentrating on spending less and delivering more and better
Tony Cotter, Chief Executive of Gallions
Housing Association, added: “This initiative is warmly welcomed by
Gallions. This type of scheme is one that we have been interested
in for some time and offers the potential to avoid the pitfalls of
the normal volatility of the insurance market.”
Huw Thomas, Chief Executive of Acumus,
highlighted the benefits of the new initiative, said: “Housing
associations have been looking for a safe way to carry more of
their own risk for a long time and Igloo provides this with minimal
cost, it also addresses many of the requirements identified by
housing associations in the recently published Procurement for
Housing insurance survey.”