Councils and emergency services will have to plan for disaster
Business interruption (BI) insurance could become compulsory for local authorities under the Cabinet Office's Civil Contingencies Bill.
A draft version of the Bill proposes that these organisations will have a "duty to plan for business continuity" in order to ensure the continuance of functions that may be required during an emergency.
Aside from local authorities, the Bill will also apply to emergency services organisations, NHS Ambulance Trusts, the Environment Agency and the Maritime and Marine Coastguard.
Zurich Municipal Management Services operations manager Michael Burke said that under the draft Bill, local authorities would be required to identify and quantify risks and have a business continuity plan, which included financial safeguards, in place to address them.
Burke said that while most local authorities had cover in place for fire and flood, very few were covered for strategic risks.
Bob Cope, chairman of the Association of Local Authority Risk Managers (Alarm), agreed. He described the current uptake of BI insurance as "piecemeal".
He said that public sector risk managers were concerned about both the cost and limits of BI insurance.
"Some of them are unaware of it and some of them can't afford it."
Cope said funding arrangements were yet to be finalised but the cost implications of the Bill were "enormous".
"That's going to have an impact on local authority budgets which are already strained," he said.
Suppliers to local authorities could also be affected. Burke said that while
suppliers were not included under the scope of the Bill, they could be required to have levels of business continuity planning by default.
"A competent local authority would say to a supplier, we will require a service level agreement which will include evidence of its own contingency plans."
Consultation on the Bill, which was released in June, closed on 11 September.