’Any measures have the potential to backfire,’ says client director 

Councils may reduce their insurance coverage to make savings as they continue to face pressure amid the current economic climate, according to Sedgwick client director Ady Hall.

Speaking exclusively to Insurance Times Hall said that while councils have been getting more money from central government, it was not enough due to increased inflation and continued pressure on services.

In turn, he believed there were “even more pressures on council tax and commercial rents than ever before”.

“The instant impact is obviously to the communities they serve, but there are other knock-on effects that could easily find their way to their insurance programme and risk management budgets, where councils may seek to achieve premium savings by reducing cover or exposures,” Hall said.


Hall warned there was no insurance cover available for a council that goes over budget.

He highlighted measures councils may take to achieve savings included not renewing speciality classes, such as cyber insurance, or potentially opting for lower limits of indemnity for employers and public liability covers.

Reducing risk managements funds or head count were also among factors Hall listed.

“Any of these have the potential to backfire without the correct risk management and claims handling solutions in place”, Hall said. 

One council that had financial troubles three times in two years was Croydon Council, with it having issued a section 114 bankruptcy notice.

A section 114 measure means a council cannot make new spending commitments and must meet within 21 days to discuss what to do next.

Croydon Council first declared bankruptcy in 2020 and was given a £120m bailout loan from the government.

However, November 2022 saw the council declare itself bankrupt for the third time – it turned to government to write off its £1.3bn debt and £500m in bad commercial investments.

Croydon Council now needs to pay £47m per year to pay its debt.

Jason Perry, executive mayor of Croydon, said: “The toxic £1.6bn debt and financial failures of the previous administration left Croydon with a hollowed-out council, which has been reliant on government bailouts for multiple years.

“My focus since I was elected mayor has been on opening the books and taking the steps necessary to get the council back on a sustainable footing.”