LGA insurance review to save ratepayers $43 million
The LGA’s review and restructure of the local government sector’s Mutual Liability and Workers Compensation Schemes is projected to save South Australian ratepayers at least $43 million over the next ten years.
These savings are in addition to the $28 million in value delivered by the Schemes to councils annually, as outlined in the LGA’s 2018 Value of Membership Report.
This LGA’s Schemes Review was undertaken following an Auditor-General’s report into local government indemnity schemes in 2015 that made a number of recommendations relating to the governance of these schemes.
LGA CEO Matt Pinnegar said this review has not only addressed the Auditor-General’s recommendations, but also delivered massive savings for South Australian councils and their communities.
“The LGA has now set up a new wholly owned subsidiary – LGASA Mutual Pty Ltd – that will oversee the Schemes, with JLT contracted to carry out the day to day operations,” Mr Pinnegar said.
“A skills based board will work with JLT for the benefit of local government to continue to provide outstanding service to councils, safeguard communities and council workers, and deliver value for money to rate payers.”
“The new governance arrangements are expected to be operational by September, however the member benefits will be applied from 1 July 2018.”
“Across both Schemes, savings of $4.6 million are predicted over the next three years, and $43.4 million over the coming decade.”
Schemes Chairman Mayor Dave Burgess said, “Working closely with the LGA we’ve identified a number of efficiencies that will deliver significant cost savings to the sector.”
“This includes an immediate saving of $2.6 million in the first year through a seven percent reduction in council contributions to the LGA Workers Compensation Scheme (LGAWCS).”
“These savings include maintaining all existing coverage and benefits to members of the Schemes.”
“Council contributions to the LGA Mutual Liability Scheme (LGAMLS) for 2018/19 will on average remain the same as from 2017/18, with average net contributions lower than they were ten years ago.”
While membership is voluntary, all South Australian councils are currently members of both the LGAMLS and LGAWCS. The Schemes were established in the 1980s – when South Australian councils found it difficult to secure insurance through traditional providers – and have saved the sector in excess of $500 million over the past 20 years.
“JLT has been a trusted partner of the local government sector in SA for more than three decades, and we’re pleased to commit to extending this long term relationship,” Mr Pinnegar said.