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RiskPool
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 Local Government Mutual Funds Trustee Limited (LGMFT)
LGMFT is the trustee to RiskPool, a mutual fund created by New Zealand local authorities to provide long-term, affordable legal and professional liability protection.
Similar mutual funds have been established successfully by local government bodies around the world as an alternative to conventional insurance products and the insurance industry's inconsistency in scope of cover, pricing, claims handling and capacity.
Membership of RiskPool is open to all local authorities. Contributions are levied according to each member's risk profile. The Fund is protected by reinsurance to protect its retained liability on a per claim and/or annual aggregate basis. Riskpool commenced on 30 June 1997 and for the 2010/11 fund year has 64 local authority members.
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Fund Protection
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The purpose of RiskPool is to replace conventional Public Liability and Professional Indemnity insurance products.
- Members are able to retain cover up to:
- $100 million for professional indemnity; and
- $100 million for public liability.
- There are minimum deductibles of:
- $10,000 for public liability; and
- $2,000 for professional indemnity.
- Members may elect higher deductibles with an appropriate reduction in contributions;
- Because of the size and uneveness of the exposure, cover for members' "leaky building" claims has been significantly reduced since 1 July 2006.
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Advantages of RiskPool Membership
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- Ownership of RiskPool and its assets remains with the members.
- Long-term savings for the sector on conventional insurance premiums.
- Retention and ownership of what would otherwise be insurer profit.
- Access to investment income that would otherwise be earned and retained by insurers.
- Broad coverage that will not be subject to profit driven, and at times arbitrarily introduced exclusions or limitations.
- Reduction of the influence of international liability insurance markets and overseas loss experiences on premium cost and coverage.
- Containment of administration costs.
- Avoidance of cross-subsidisation of less profitable or more claims intensive lines of insurance.
- Any over-statement of claims estimates in previous years is eventually redeemed rather than retained by Insurers.
- Access to value added services:
- Risk Management
- Legal Services
- Education
- Claims handling and negotiation
- Dissemination of pooled Information and resources
- Early and pro-active focus on claims. Members are involved from the outset and assessment of liability is achieved through the involvement of insurance experts in the local government sector rather than strictly insurance specialists.
- Group support by way of sharing experience and knowledge amongst members.
- Control of the decision making process without the external influence of other parties.
- Bulk purchasing discounts for catastrophe and stop-loss protection.
- Allocation of contributions on an equitable basis determined by risk exposure rather than profit margins and what the market will bear.
- Control and reduction of claim investigation and legal costs that contribute to claims experiences.
- Enhancement of public relations by the introduction of timely and efficient conduct of claims.
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