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Funding woes put infrastructure top of councils’ risk list

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Infrastructure has topped an annual ranking of local government risks, while cyber jumps to fourth place after entering the list for the first time last year.

Financial sustainability and stability is in second place on the Aon-compiled ranking, followed by health and safety. Reputation, human resources, asset protection, funding, planning decisions and weather round out the top 10.

“Funding squeezes and rate capping, particularly in NSW and Victoria, twinned with rising ratepayer expectations, ensured infrastructure and financial sustainability and stability remain at the top of the list,” Aon says in its report on the survey.

“Health and safety, cyber, reputation and human resources concerns have all leapt higher as councils count the risk and cost of human impact.”

About 86% of survey respondents have made claims in the past year, with trips and falls accounting for 23.94% of the total, followed by storm damage and tree root damage.

Local government insurance is mainly provided through mutual schemes advised by JLT.

But Aon says more councils are looking towards alternative arrangements.

“In 2016 just 9% of the market was not signed up to a mutual scheme; last year that rose to 11%,” it says. “This year heralds a significant shift, with 25% of the market now using or with an intent to use independent brokers, signalling the value they believe can be extracted by a move to commercial insurance.”

JLT last month defended its councils business, noting that of the 54 councils going to public tender or obtaining other quotes during the renewal season last June, only four changed their cover, while 50 continued to receive insurance through the mutual schemes at rates lower than alternatives.