General News
5 August, 2021
Council moves to self-insure
MAREEBA Shire Council has made the gutsy decision to stop ensuring their facilities through a third party in a bid to keep the hundreds of thousands of dollars they pay for insurance, local.
MAREEBA Shire Council has made the gutsy decision to stop ensuring their facilities through a third party in a bid to keep the hundreds of thousands of dollars they pay for insurance, local.
The motion was passed at MSC’s July council meeting to begin self-insuring their own facilities, placing an equivalent amount to the typical annual premium into a self-insurance reserve.
Other council insurance policies such as public liability, motor vehicle cover, professional indemnity will be maintained, the decision will take affect in the 2021/22 financial year.
Currently in the 2021/22 financial year, council is paying around $335,076.26 to a third party for their facilities which includes toilet blocks, council chambers and some community halls that are not currently leased. Leased properties such as the PCYC halls and the Leagues Club operate with their own insurance.
Now Council will be putting approximately $300,000 a year into the reserve which has the potential to fluctuate depending on annual reviews.
MSC CEO Peter Franks said that due to the rise in insurance premiums and the continuing low rate on incidents, council made the call to self-insure.
“We’ve had no claims on our facilities in the past seven years,” he said.
“We pay nearly $400,000 a year to an insurance company to insure.
“Because the risk is so low council has made the decision to take that money and put it into a reserve.
“On the basis that hopefully we don’t have an incident, in a few years’ time we will have sufficient money in the reserve if something happens.”
The reasoning behind council’s decision to move away from third party insurance was born from the continual increase of insurance premiums, and the low-level history of insurance claims and risk over the years.
Self-insurance may seem like a good idea on paper to stop pulling money out of the community and giving it to a third party, however the point of insurance is to act as a safety net.
Someone may go their whole lives without making a claim on their car, home or contents insurance, but if people knew they wouldn’t take out a claim, they would never insure.
Just in case something does happen, you are not left suddenly stranded without a car or a home.
Until Council can secure a sizeable insurance reserve to cover the possibility of damages, they are floating in open water without a paddle.
