Our Stop Loss product is designed to meet the needs of local authorities which operate and manage a mutual staff absence fund for their schools.
The Stop Loss facility minimises the risk of the fund falling into deficit if higher than expected levels of absence occur.
This helps to reduce the risk of end-of-year ‘clawback’ on school budgets should the fund unfortunately experience a deficit.
A Stop Loss policy can enable a local authority to pass back accrued surplus funds to schools.
Specialist experts, providing local authority school staff absence insurance schemes and risk management advice since 1992, we are a well established market leader. More local authorities and schools use BEST to protect their absence budgets than any other commercial provider.
Our Stop Loss facility is used by authorities all over England and Wales, ranging from large shire councils to smaller unitary authorities.
How the Stop Loss facility operatesThe pooled fund continues to function in the usual way, but a 'safety net' insurance policy is placed over it.
A claim is made on the insurance if claims on the fund exceed a certain level, known as the retained layer.
How retained layers are calculated
That retained layer is calculated by BEST, with the assistance of the authority. It is comprised of a value for estimated claims against the pool for the coming year together with a small buffer to allow for an expected level of variation. A number of factors are taken into account, including the past claims made against the fund and the buying pattern of schools that have joined the fund in the past.
An estimated retained layer can be provided based on the schools currently participating in the fund. If cover is put in place for a future year then a retained layer is then re-calculated on the actual participation in the pool.
Recommended levels of protection
As a guide, authorities tend to insure for an additional 30-40% of the mutual fund,
e.g. £350,000 on a £1.0m fund. Each authority chooses its own level, with informed
guidance from BEST.
Date of inception
The insurance cover should run concurrently with the annual pool arrangement.
Premium costs
Cost depends on the level of insurance required; the more the insurance, the greater
the premium.