Helping schools tackle major losses
- Major loss events such as fire and flood can deal a devastating financial blow to independent schools
- Schools are often under intense scrutiny over how they respond to a major loss event, with possible high-profile reputational implications
- We look at how we helped one school find a timely Business Continuity solution when fire struck, and introduce our schools guide for addressing major loss risk
Major loss events can have devastating, lasting impacts on independent schools and costs can be high. Zurich Municipal’s Major Loss Team has received claims in 2016 with an average cost of £740,000 from education establishments.
The schools that have been able to hit the ground running in an incident, are the ones who have a plan beforehand”
Paul Redington, Major Loss Team
Paul Redington, of Zurich’s Major Loss Team, has supported a number of independent schools through the trauma of a major loss event, such as a significant fire or flood.
Here, he discusses key reasons why independent schools need to proactively address the risk of a major incident with a strong Business Continuity Plan (BCP).
Balancing cash flow and major loss risk
Our research into independent schools’ views of risk found that cash flow challenges are the top concern. With income seasonal, but costs steady throughout the year, independent schools have to keep a constant eye on their financial health and cash flow.
If a school’s finances are insecure – due, for example, to falling numbers of fee-paying students, or the loss of fee or bursary assistance – an unprecedented major loss could be financially devastating. Ensuring your school has a comprehensive BCP gives you the best possible chance of minimising the impact of costly major loss events.
Redington says: “We appreciate schools’ budgets are run quite tightly and cash might not be readily available in the aftermath of a major loss event. Through our major loss response, we can significantly support customers by providing that early cash injection to support business continuity.
“Thereafter it involves working closely with a school on its recovery strategy to keep finances ‘in front’ of that expenditure, including regular face-to-face meetings where appropriate.”
Business Continuity Planning and reputation
Though a fraction – around 625,000 – of the UK’s students are taught in independent schools, their significant contribution to the UK economy and overseas reputation, and their elite standing, inevitably draws attention.
This increases the need for stakeholders to see independent schools handle major loss risk, events and impacts, with authority, care and timeliness.
“Major loss events are very traumatic, with a lot of ‘noise’, disruption and sometimes stress,” says Redington. “It’s very important that staff know what their roles and responsibilities are, and who to contact post event. The schools that have been able to hit the ground running following an incident are the ones who have a plan beforehand.”
He adds: “Schools are often put under the microscope for how they respond in a big event, which may attract local or even national media attention. Parents and local stakeholders will want to know what the impact is on students’ education, and how this is being managed.”
Share the learning
Independent schools can work together to better understand risks by sharing experiences and knowledge.
“Traditionally, it has been more difficult for independent schools and academies to have that degree of collaboration when it comes to learning from one another,” says Redington. “It’s happening more, but there’s still room for improvement for that level of engagement.”
Protecting your school against major loss
Our Major Loss Team provides end-to-end support for independent schools to prepare for, mitigate the risk of, and manage major loss events.
Redington says: “The key to responding well is teamwork, and we very much see ourselves as part of your team. Our customers can ring us when they want to ask questions. It’s about everyone pulling together – knowing what to do, and when.
“Every major loss event is a huge learning curve for a policyholder. But we’re there to reassure you that you will come out the other side.”
Our Independent Schools Reputation Risk Insight offers a number of practical steps for addressing specific fire and flood risks to your school, and a checklist for building your Business Continuity Plan.