Departmental Insurance (Hansard, 24 May 1988)

§ 9. Mr. Michael McNair-Wilson
To ask the Secretary of State for Defence what steps he takes to ensure that his Department uses the services of the insurance industry so as to mitigate its annual losses in equipment and facilities.

§ Mr. Freeman
The Ministry of Defence does not generally insure against the risk of any loss to property, buildings or equipment. Over the long term, the cost of insurance should exceed average losses. Although the risks are potentially very large and widely distributed, they can never produce losses maturing in any one year so as to have a significant effect on the overall financial position of the Exchequer.

§ Mr. McNair-Wilson
Will my hon. Friend give the House the figures for the loss, particularly by fire damage, to stores and buildings at the Ministry of Defence over the past five years? Can he estimate the likely cost of the fire damage to the central ordnance depot at Donnington, the second fire that it has endured within the past two years? Does he not think that the time has come for some of those risks to be borne by the insurance industry?

§ Mr. Freeman
The answer to the first question is, over the past five years, approximately £152 million. The answer to the second question is that it is still too early to provide estimates, but the figure is probably in excess of £100 million. The answer to the third question is no. We have no plans to insure specific losses, but we have plans to extend the principle of insurance where the insurance industry can offer a service, such as settling claims. We do that with third party motor vehicle insurance and civilian employers' liability.

§ Mr. Foulkes
What is the position about aircraft such as the Tornado that was recently lost in Germany? Will the Minister reconsider the arrangements, particularly in relation to relatives of the people who were killed.

§ Mr. Freeman
We always regret aircraft accidents. The aircraft accident trend is down. Last year was the best year on record for the number of aircraft lost. The service men who lose their lives or who are injured are covered by the armed forces pension scheme. If negligence is involved then, following the repeal of section 10 of the 1947 Act, they can claim against the Ministry of Defence.