The Education Funding Agency has decided to introduce a voluntary risk pooling scheme for academies with effect from 1 September 2014. This will provide an alternative and potentially cheaper method for insuring matters such as the premises occupied, employers' and public liability.
When an existing maintained school is converted to an academy, these insurance obligations pass from the local authority that maintained the school prior to conversion to the academy company that is created to run the academy or the multi academy trust that sponsors the conversion of the school. Insurance for academies has generally been more expensive than for maintained schools because academies do not enjoy the same economies of scale as local authorities. This means that money that could be being spent on educating pupils is being spent on insurance.
Under the new scheme academies will pay around £25 per pupil back to the Education Funding Agency who will hold the money in a central pool. If an insurance claim is made the academy will apply to the Education Funding Agency to settle the claim rather than an insurance company.
The scheme will be voluntary meaning that academies who prefer to insure through a commercial provider can continue to do so. However, after the first year of the scheme the Education Funding Agency will only provide funding for insurance policies that amount to £25 per pupil or less, which will encourage academies to join the scheme. New academies and free schools will be eligible to join the scheme with effect from 1 September 2014 and existing academies and free school will be able to join the scheme as their current insurance arrangements expire.
The Department for Education is currently consulting with existing academies and free schools to obtain more information about current insurance arrangements and recent claims history. Further details of the new scheme are expected to be published at the end of March 2014.