Marsh UK chief executive Mark Weil urges education secretary Nicky Morgan to ditch insurance plan
Marsh UK chief executive Mark Weil has given a dire warning to education secretary Nicky Morgan about the government’s new insurance plan for academies and free schools.
Weil is concerned about department for education plans to introduce risk pooling arrangements (RPA) for academies and free schools.
Currently, academies and free schools buy insurance on the open market like any other organisation. Their premium is priced appropriately for the risk.
But from 1 September they can choose for the government to pay a fixed £25 per pupil.
Weil has written to Morgan warning the scheme will increase the taxpayers’ bill in the long-term and compromise pupil safety, the Telegraph reports today.
Weil wrote: “In the case of the academies’ RPA, we see a poorly thought-through change seeking a notional short-term saving that will in fact create significant losses for the tax-payer.
“More importantly, it will expose the government to accusations of compromising pupil and staff safety by operating a scheme that creates a perverse incentive for managing risk.
“A flat charge creates a moral hazard. Unlike in the commercial world where the price reflects the current risk of the client, schools in the RPA will have nothing to gain from managing down their cost of risk because their premium stays at £25 per pupil.
“That means that any short-term savings a school can get away with, for example, health and safety measures, carry no penalty in terms of insurance costs.
“While you will regulate to prevent this, any incidents that do arise in schools in the RPA will leave the government open to question on this basis.”