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Reduced funding and alternative insurance from the Education Funding Agency

20 February 2014

Education Funding Agency to launch alternative insurance option for academies and free schools at the same time as reducing funding for insurance.

The EFA has written to academies outlining significant changes to insurance arrangements for academies and free schools, effective from September 2014. Academies are currently required to procure appropriate insurances under the terms of their Funding Agreements and to comply with the Academies Financial Handbook.  Under the existing system academies purchase insurance either on the open market or through one of the government’s approved procurement schemes. Funding is provided equating to approximately £45 per pupil, based on an average of £25 per pupil in the basic entitlement plus a supplement of £20 per pupil to reflect the fact that open market insurance is more expensive for academies than maintained schools.

The EFA has announced that they are introducing a voluntary risk pooling scheme for academies and free schools. The cost will be a flat fee of £25 per pupil and the EFA feels this will be highly competitive. At the same time as introducing this scheme it will also be withdrawing the £20 per pupil supplement as the provision of insurance under the risk pooling scheme would make the supplement unnecessary.

Details of the scheme and its coverage will be made available by the end of March but the EFA has confirmed that it will offer a comprehensive range of cover, including premises, employers’ liability, public liability and school trips. It remains to be seen whether it will also cover issues like Directors’ and Officers’ liability to provide Academy Governors and Directors with sufficient comfort.

There will be transitional arrangements for academies in long term arrangements but all academies must be aware that if they enter into multi-year insurance arrangements after 13 February 2014 the EFA will not reimburse the academy for costs above £25 per pupil beyond the first year.

Academies and Free Schools will be able to find out more details at the end of March but it is perhaps the existing insurers in this sector that will be particularly  interested in the finer details of the new scheme.

Read the EFA letter to academies here

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