If you insure against absence, mind the policy pitfalls, advises Mark Whitehead
Supply cover was once a simple business. Faced with an absent teacher, a head simply drafted in one of the regular supply staff or telephoned the local authority for help. But local management of schools changed all that. With increased financial independence, after 1991, schools could choose how to protect themselves against the high price of supply cover - typically now costing about Pounds 125 a day.
There are three main options. Firstly, schools can gamble on not having any serious absences. If the school is lucky, it can use any money delegated for supply cover to pay for other things. This could suit large schools with the flexibility to use permanent staff to cover absence. But it is a bigger gamble for small schools where the proportionate effect of absences is magnified. But a school with, say, two teachers might receive Pounds 2,000 a year from its LEA for supply cover. That would only pay for about 16 days of absence. Any more than that - caused by a serious long-term illness or a bout of flu - and the school lurches into the red.
The second option is to pay into an insurance scheme run by the local authority. Most councils set up their own schemes when local management of schools was introduced. But many, faced with complex and precarious finances, have fallen by the wayside. The few still in existence may have the advantage of being reliable and comprehensive, covering all staff absences after a certain waiting period, without excluding anyone because of previous illness. Some local authorities run their schemes in conjunction with a commercial underwriter which sets the premium and conditions and, in exchange for an annual payment, picks up the bill if the premiums collected by the LEA do not meet the amount it has paid out.
The third option is for schools to take out their own insurance policy. There was a wide choice of such policies in the year after LMS when several companies rushed into what they saw as a lucrative market. But many seriously miscalculated and had their fingers burned, with many schools receiving payouts much bigger than the premiums they had paid. Insurance companies have now adjusted their calculations to reflect the risk more realistically. But the commercial option can still be a good bet, especially for small schools.
The possible drawbacks are that policies are likely to be fairly narrow in what they cover. Clauses excluding staff who have had a recent illness can be a problem. It can mean anyone who has had an illness in the previous 12 months, for example, being excluded, thus forcing the school to make separate plans for them at extra cost.
Pre-existing illness exclusion clauses may create further problems if staff have failed to notify the head of consultations with a doctor over some kinds of illness - stress, for example. If the teacher is subsequently forced to take leave, the school may find itself without cover for them.
The crucial point, says Phil Ward, education liaison officer at the Association of British Insurers, is to make sure that the risks of staff absence are properly assessed and that the right kind of provision is made. Headteachers should look at their previous staff absence history and decide whether insurance is needed.
"You need to estimate as part of the management of the school what your requirements are likely to be. The risk of staff absence needs to be assessed annually, just as the risks over buildings and contents are assessed. Staff absence is a risk factor just like anything else."
He also emphasises that schools should check carefully who is ultimately providing the policy - it should be either a Lloyd's syndicate or a company registered with the Association of British Insurers. Both organisations can be contacted to check.
Gary Salter, director of the Brokers Educational Supply Teachers Underwriting Agency (BEST), which has brokered insurance polices for about 700 schools and several local authorities, says it is crucial to look very closely at what is on offer. Points in a policy to look out for include any exclusions, what kind of absences are covered, when cover starts from and how much is paid for each absence.
But whether a policy is worth paying for is a matter of judgment. Alan Woof, of Zurich Municipal, which offers an insurance package to grant-maintained schools, says many choose not to take the supply cover element. "It's a cost-based decision," he says. "If the premium is higher than the cost of supply cover over the previous three years, it may not be worthwhile. In big schools it may make sense to provide their own supply cover than pay for insurance."
TO INSURE OR NOT TO INSURE
* East Coker primary school, Somerset (11 staff). Insured through BEST April 1996. Premium: Pounds 3,766for teachers and support staff, cover from the fifth day of absence. So far this year claims already total about Pounds 3,000. Headteacher Peter Sweetlove says: "The important thing is to look at your staffing history and see which scheme is most suitable. If we had had a long-term problem of sickness the commercial option would not have been such a good deal for us."
* Abbas and Templecombe Church of England primary school near Wincanton, Somerset (6 staff). County council scheme, available to primary and special schools. Commercial quotes Pounds 5,500, compared to Pounds 2,400 for cover after the first five days. The county gave back a 15 per cent rebate because claims were lower than expected.
* Kennet School, Thatcham, Berkshire (90 staff). Covers its own supply costs rather than opting for a commercial policy. It maintains a fund of about Pounds 12,000 a year to pay for cover. Headteacher Paul Dick says: "Every year we ask for a couple of quotes and compare the advantages and disadvantages of what is on offer. So far, we have found we are much better off doing it ourselves, even when we've had a problem with long-term absence."