Annual Report 2019/20 Welcome to CivicRisk Mutual Limited’s 2019/20 Annual Report. This year our annual report provides information about the journey and growth of the Mutual, the highlights and challenges, the member benefits and the financial performance for the combined group as well as the financial statements for CivicRisk West, CivicRisk Metro and CivicRisk Mutual. 2 CivicRisk Mutual Annual Report – 2019/20 Contents Chairman’s Report 4 Message from the CEO 6 Our Story 8 Highlights & Challenges 10 Board of Directors 12 Members Assembly & Committee Representatives 16 Mutual Members 18 Member Benefits 20 Concise Financials 22 CivicRisk Group Financial Highlights 24 CivicRisk Group Financial Performance 26 CivicRisk West Financial Statement 28 CivicRisk Metro Financial Statement 29 CivicRisk Mutual Financial Statement 30 CivicRisk Mutual Limited Financial Statement 31 3 Chairman’s Report I am pleased to present The member contributions have increased the first combined annual report on average by only 1% over the last 10 following the recent decision by years while membership has doubled. members to amalgamate our joint venture insurance pools into The Mutuals accumulated CivicRisk Mutual Limited. surplus is $63.4 million This strategic decision to amalgamate and $430,000 of risk CivicRisk West, CivicRisk Metro and management support CivicRisk Mutual into a single member was provided to our owned mutual builds on our philosophy of working together in the spirit of members in 2019/20. mutuality to manage risk and minimise the financial impact of insurance. CivicRisk Mutual has continued to provide stability in insurance costs in a traditionally 2019/20 has been an extremely volatile market. Although we have challenging year with insurance costs benefited recently from a relatively soft increasing, devastating bushfires, flood market, insurance costs are increasing, events and the impact of COVID-19. and we are well placed to respond to Even with these challenges the combined the hardening market. CivicRisk Mutual CivicRisk group achieved an excellent achieves stability by setting contributions financial result with a surplus of $3.1 at a prudent level, which covers all costs million. The consolidation of funds will while building provisions to address peaks improve our overall capital position and and troughs of the insurance market. enable the Board to return $10 million to The Mutual also reviews its self-insured foundation members whilst maintaining layers to take best advantage of market a capital position of 175% of APRA conditions and negotiating favourable benchmark. bulk purchased insurance. The CivicRisk Mutual group, through its In 2019 CivicRisk Mutual increased prudent financial strategies, has saved the level of support to respond to members collectively $85 million since member needs, facilitate risk sharing, inception and returned $20 million to organise training and provide a single members over the past 10 years. contact for risk enquiries. We also introduced on-line training sessions and organised numerous onsite Council training and information sessions. 4 CivicRisk Mutual Annual Report – 2019/20 CivicRisk Mutual has now completed The success of our Mutual is largely the second stage of our Continuous Risk a result of the commitment and efforts Improvement Program (CRIP) which of our members. In this regard, I would involved a review of each member’s risk like to congratulate all members of $3.1m management systems and programs. the Board, Members Assembly, Risk surplus this financial year Management and Finance Committees The reviews uncovered excellent examples on this year’s achievements. of risk management whilst highlighting areas where we can focus more efforts Finally, a personal thanks to our executive to manage risk. To assist the members in team, Andrew Armitstead, Lisa Williams, implementing recommendations, CivicRisk Nicole Mahon and Kaye-Anne Goodshaw. $10m Mutual provides $10,000 annually to The achievements of the Mutual are returned to foundation each member towards risk initiatives and only possible through the hard work members in 2020 $3,000 for motor vehicle risk projects. and commitment of our administrative team and they continue to provide This year the executive team, with the excellent service to the Mutual. assistance of the service providers, tendered for six new Councils and I Well done to all and I look forward $85m am pleased to confirm all six Councils to a successful 2020/21. saved collectively through joined the Mutual on 1 July 2020. This our members since inception represents our most significant growth in membership, and we welcome the new members to CivicRisk Mutual. The steady growth in membership demonstrates the Councillor Ross Fowler OAM excellent reputation the Mutual maintains Penrith City Council $20.3m for risk management and quality Board Chairman returned to members over insurance solutions. the last 10 years Willis Towers Watson (WTW) and Claims Management Australasia (CMA) continue to provide outstanding service to the Mutual and play a key role in maintaining a strong relationship with our underwriters. Both service providers assist the Mutual by delivering a greater variety of products and support services. Finity Consulting continue to provide excellent actuarial advice to the Mutual while our legal panel provide sound legal advice and defend claims on behalf of the members. 5 Message from the CEO Our Mutual Journey From 2003 the insurance pools of Westpool and Metro Pool combined CivicRisk Mutual owes forces establishing a centralised single its existence to foundation service team of providers and investigating members who in 1988 decided to new products and services. pool their risks in response to an In 2005 they approached the Minister for insurance crisis that left Councils Local Government and established, what without an insurance solution. is today called, CivicRisk Mutual Limited. Together the members developed a suite The Mutuals had humble beginnings of products including Public Liability & commencing with a self-insured pool for Professional Indemnity, Property, Motor public liability. The first 12 years were Vehicle, Directors and Officers plus difficult for pooling as Councils continued Fidelity Guarantee insurance. They also to manage the ever-increasing cost of began building a healthy reserve which liability claims and litigious environment would ensure financial security and that heavily favoured plaintiffs at the protect the Mutual in hard times. expense of Councils. The members made a strategic decision The unbalanced legal system caused the not to seek additional members until they State Government to introduce the Civil had the financial stability and suite of Liability Act in 2002 which provided a insurance products to satisfy the member much more favourable legal system with needs. They also developed a new member sound defences for Councils to apply due diligence review and a continuous and placing personal responsibility on risk review process for all members to claimants. The members of the Pools benchmark ongoing performance and contributed to this change, joining forces support members to build risk resilience. to lobby the government for change and providing statistics that clearly In 2010 CivicRisk Mutual was ready demonstrated a need. The Mutuals were to welcome new members and 14 new also instrumental in the change by taking Councils have joined the Mutual over a claim (Ghantous vs Hawkesbury Council) the past 10 years. to the High Court, winning a landmark decision which lead to legislative reform. 6 CivicRisk Mutual Annual Report – 2019/20 Through the Mutual we strive to protect It has been a steep learning curve the members from the volatility of the and we owe our success to the vision insurance market and channel savings and courage of the founding members. back to the members. From 1 July 2020 For they have created a Mutual that CivicRisk Mutual provides risk services, provides a range of member benefits, insurance protection, claims management, bespoke insurances and risk management training, and professional development to services which enables todays members 24 Councils from as far north as Richmond to take control of their risks. Valley, Parkes in the west and Snowy Monaro to the south. In these times of uncertainty and responding to a natural crisis there has CivicRisk Mutual is member owned and never been a better time for us to work managed with a dedicated service team together for the good of all. CivicRisk that deliver a wide range of member Mutual continues to thrive and is a perfect products and provide quality service. example of what can be achieved if Local Government work together. Our values are to work Congratulations to our members for together for the good of all all that you have achieved, and we look in the spirit of mutuality forward to continuing to deliver excellent service for many years to come. with equal representation, financial stability and transparency. Andrew Armitstead Over the past 2 years the members have Chief Executive Officer taken action to review our corporate CivicRisk Mutual Limited structure and member services to ensure we continue to deliver this quality risk service to an ever-increasing membership. We believe in measured growth and only accepting Councils who are committed to sound risk management and the principles of mutuality. 7 Our Story Civil Liability Act introduced Westpool and Westpool created Metro Pool sign to provide joint agreement Public Liability