Government's annual insurance bill for property cover for a $1 billion dollar portfolio of public property has tripled, with premiums climbing to a record $4.5 million.

But the Works & Engineering Minister, the Hon. Leonard Gibbons, said that the increase comes about mostly because of Government savings in premiums in the past.

Three years ago Government locked itself into a second consecutive three-year deal with its insurers at the old price, temporarily keeping it immune from the massive hikes in property reinsurance rates in recent years.

But during the renewal period this year, the value of the portfolio of Government property was said to have swelled by almost $100 million to $1.053 billion, with the addition of base lands and other new Government facilities.

Meanwhile, the policy's loss limit of $50 million has been raised to $100 million. The Minister pointed out that $4 million was paid to Government to cover the insured damage from Hurricane Emily.

Also the cost of public liability insurance premium for Government properties has remained at the old rate.

The just concluded deal this month has reduced the term of cover from three years to one year, as officials use the immediate future to further assess their insurance options.

The deal was struck with their insurance company, Commercial Union Assurance Company (CU) Plc, through CU's local representative Centurion Insurance Agency of Argus Insurance Company Ltd. Government on July 4 signed a one year extension.

The last three-year policy expired at the end of June, ending a period in which it is believed that Government received more money in benefits, than they paid out in premiums, with Hurricane Emily and a school fire being the principle events for claims.

The Minister said, "Our last policy of three years allowed us to take advantage of a very good rate. We were not hit by significant increases in premiums as other insureds were over the last couple of years. But now we have to pay the going rate.

"The primary reason for the increase in premium is the reinsurance which was raised as a result of worldwide losses.'' Government will also spend the next year reviewing its current risk management programme.

Mr. Gibbons said: "We hope to get recommendations on the risk management and risk finance strategy. That is, do we self-insure, do we go to captives.

"One of the drawbacks to the captive idea is that it is usually useful because it has a tax advantage. Obviously, if Government is insuring itself in Bermuda, there is no tax advantage, so we have looked to our risk management company, Commercial Union Risk Managers (CURM).

"There has been some advice sought and received through the Ministry of Finance, the Registrar of Companies, with some input from local companies.'' But the Minister did confirm that consideration has been given to going out to tender for a new risk manager, when the current CURM contract is completed.

But he stated that CURM had served the Government well, and the consideration was only a matter of reviewing Government programmes, as is done in a number of departments.

But bids may be invited in the future from other risk management companies.

Commercial Union, the UK's largest life and general insurer, in November reported that during last year's first nine months it doubled its profits when compared with a similar period the year before, with a quoted pre-tax profit of $494 million.