How do you fund the replacement of absent staff?

You probably do this in one of three ways:-

1. Self Insure - in other words you pay the costs and take the risk yourself, and when you have a bad year you have to take it on the chin. Can be very cost effective if you are lucky but if you are unlucky then you can get a massive hit to your school's budget. A risky strategy!
2. Insure with commercial insurance provider - this allows you to offset the risk amongst others through the commercial insurance market. An excellent safeguard against excessive costs but can have restrictions and you will pay over and above the amount of perceived risk to enable the commercial insurers to return a profit, pay brokers and underwriters costs and premiums, and have insurance premium tax (IPT) added on top. In fact you are likely to be paying at least 30% more than you need to.
3. Insure in a Local Authority Mutual Fund. Has the benefits of commercial insurance without the extra costs. Therefore this should be the most cost effective way to cover your costs. However, in reality local authorities have stretched resources and funding and it is not always possible for the schemes to be run or optimised as well as they could be. Therefore your premiums can be uncompetitive or unrealistic and in time the scheme can become underfunded, or end up carrying disproportionate risks with the well performing schools paying over the odds. Eventually this can result in the demise of the scheme as administrators find it too difficult to manage the scheme, and schools find it uncompetitive.

So what is the answer?

• Large Schools can normally cover staff absence with other staff, so for short term absence they could self-insure, however it makes sense to cover long term absences with some form of insurance as these are the absences that really hit budgets for six. Therefore join a scheme which has a high number of excess days, that way you'll be covered when you need it most, but will keep your premium to a minimum.
• For smaller schools who find it difficult to cover absences themselves, insurance of some description is the sensible and practical order of the day. Clearly the best option is to be in a mutual fund but it must be well managed and appropriately risk assessed like a commercial fund otherwise the scheme will eventually fail or offer poor value.

Either way the best option is to be part of a mutual scheme if at all possible, unless it is not optimised.

Does your authority run a mutual scheme for you to take part in? They don’t! – find out the truth about staff sickness here

Do you want to reduce the costs you spend on covering absent staff and save time and effort?

You can if your authority already has a scheme: 

• Join it if it is competitive compared with commercial providers.
• If it is not competitive encourage the scheme administrators at your authority to use our specialist Absence and Claims Management System to lower the costs, lower the risk, increase scheme stability and longevity.
• Your authority will probably never go looking for a system such as this because they do not realise they need one, or are too busy to think they could run their existing scheme more effectively. Your current scheme may run well, i.e be in surplus, and this is the normal measure of success for a local authorities . However, you should be aware that it can normally be managed for a lower overall cost with an improved level of service if that is important to you. 

You can if your authority does not run a scheme: 

• Get together with other schools and encourage the authority to start a scheme. They may resist as there are costs involved and they may not have the necessary insurance and underwriting experience. If that is the case they can use our system to alleviate these problems and it will allow them to run a scheme for you as efficiently as possible. Your savings will more than cover the costs of them running a scheme.
• If your authority has absolutely no intention of running a scheme, we can offer a shared service centre option whereby we run your scheme for you with the help of staff from other authorities who already run successful schemes. This costs slightly more than getting your authority to run a scheme but it is still an extremely cost effective means of saving you money overall and ensures you have back up for the time when you need it most. We do not act as an insurer but purely as an administrator of your scheme so your funds stay entirely within the control of your local authority. Please contact us for further details.

We can help your local authority professionally manage a Mutual Staff Sickness Fund to banish the headaches associated with this type of cover. The Esphera Absence & Claims Management System is a fully outsourced Internet based Absence and Claims processing and reporting application specifically designed to replace paper and spreadsheet based claims processes. Once using the system you will be able to send absence returns and make claims much more easily and monitor and manage absences and payments more effectively.

Essentially a Local Authority is able to configure the system to cater for its own scheme rules and then allow schools to submit returns electronically or on paper to the Authority. These contain details relating to the school itself, holidays for the school, staff members, their absences and claims for payment against the Authority held fund. These are then easily checked on-line by the Authority administrators where feedback and claim outcomes can be notified to the schools immediately.

The reporting side of the system will enable you to report on absences across many different areas. This includes reports detailing or summarising all absence and claim details for particular returns, dates, individuals, causes and many other subjects of interest. An extensive search facility will allow you to find information on all or any of your submitted returns using detailed and complex search criteria where required. Because our system contains all the historical absence data we can accurate analyse patterns to predict future absences across the key categories. This enables our system to produce a very accurate expectation of future absences so that you may set your premiums realistically enablling your scheme to be attractive to schools whilst retaining commercial realism and so ensure its continuing viability. 

AN ALARM PARTNER

The Esphera system is the only system recommended by Capita Absence Management Services to effectively manage such a fund and provide accurate information on which they can more accurately base stop loss insurance premiums to cover the scheme in the event of a catastrophic year.

What Local Authorities are saying about their real-life experiences using the system:-

“For the first time our fund is up to date and under control”

“Costs of handling claims reduced by over 80%”

“Takes 30 seconds to do what used to take us 4 weeks”

“It costs us approximately 2.5% of fund – a small overhead compared to the benefits which way exceed that – we’re finding this a real help”

"We couldn’t run our scheme effectively without it”

"If we didn't have this we wouldn't have a viable scheme."