What is Ministerial Standing Direction 3.7.1 and where do I find a copy?

The Minister for Finance issued risk management and insurance standing directions under the Financial Management Act 1994.

Standing Direction 3.7.1 was updated in June 2016. It requires compliance with the framework mandatory requirements. 

What is insurance attestation?

Agencies must attest in their annual report that they have complied with Standing Direction of the Minister for Finance 3.7.1 and the mandatory requirements set out in the updated Victorian Government Risk Management Framework.

This involves public sector agencies making a judgment on the amount of risk they can bear and, where they decide to bear that risk, ensuring they are able to meet the financial impacts from existing resources.

The standing direction can be found on the Department of Treasury & Finance website.
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What are the Insurance Management Policy & Guidelines for General Government Sector?

This document deals with insurance and the use of insurance in the Victorian general government sector within the context of a properly structured risk identification and management plan.  Download the Insurance Management Policy & Guidelines for General Government Sector [PDF, 682 KB].
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How do I attest?

To comply with the Standing Direction for risk management and insurance requirements, public sector agencies must:

  • conduct an annual review of its compliance with both requirements;
  • attest in the agency’s annual report that it has complied with Ministerial Standing Direction 3.7.1 or, if it is partially in compliance, identify areas of non-compliance and remedial actions taken in the attestation; and
  • ensure the Audit Committee reviews and monitors compliance with Ministerial Standing Direction 3.7.1, and makes a recommendation to the Responsible Body on the level of compliance attained.

Sample Attestation

Department

I, (Name – Responsible Body) certify that the (name of department) has complied with the Ministerial Standing Direction 3.7.1 – Risk Management Framework and Processes. The (Name of Department) Audit Committee has verified this.   

Statutory Authority and other relevant agency:

I, (Name – Responsible Body) certify that the (name of agency) has complied with the Ministerial Standing Direction 3.7.1 – Risk Management Framework and Processes. The (Name of agency) Audit Committee verifies this (if an audit committee is available to verify).
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What support is available? 

VMIA has developed tools and guidelines to support Public Sector Agencies in complying with insurance attestation. These are available within our resources section or the Victorian Government Risk Management Framework section contact us on (03) 9270 6800 for additional assistance.
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What if my agency doesn't comply with all the mandatory requirements?

Departments and agencies may amend the wording of the attestation having regard to their risk profile, risk management maturity and operating context. Where an agency has only partially complied with the Direction, the attestation must include an explanation of remedial actions to address areas of partial compliance.
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Will questions asked by VMIA as part of the annual insurance renewal process for the insurance attestation form part of the compliance signoff under DTF's Financial Management Compliance Framework (FMCF)?

These questions do not form part of the compliance sign-off data and agencies are still required to complete the FMCF certification in line with the FMCF certification checklist, which is available on the Financial Management Compliance Framework section of the DTF website.
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Will the Insurance Attestation form part of DTF’s Financial Management Compliance Framework (FMCF)?

The Standing Directions for the Minister for Finance (the Directions) require agencies to certify that they have complied with all applicable Directions.  This is done through the Compliance Monitoring System (CMS).

The Ministerial Direction on insurance is an important part of the suite of Ministerial Directions.  In addition to certifying compliance through the CMS, department and agencies are required to publicly attest that they have met the requirements of the Ministerial Direction 3.7.1 Insurance.
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How do I value self-insured retained losses?

A number of methodologies may be used for the valuation of self-insured retained losses. The DTF-VMIA presentation on Slide 11 provides three suggested methodologies [PDF, 471KB]. 

Our research suggests that the valuation of the self-insured retained losses should satisfy the requirements of the AASB 137 Provisions, Contingent Liabilities and Contingent Assets, and the relevant requirements of the DTF Model Report.
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What are the requirements for agencies whose deducible is less than $250,000?

The requirements for all agencies responsible to attest are the same. VMIA may collect additional information for clients with deductible $250,000 and above.
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What is the intended use by VMIA of the information collected through the insurance attestation process?

The information collected will help inform and provide a baseline on the adequacy of Public Sector Agencies insurance programs.   This data will assist in identifying and taking steps in reducing the total cost of risk for the State of Victoria.
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Do only larger agencies get results of the VMIA data analysis and benchmarking?

VMIA will continue to provide high-level, de-identified and aggregate data to all Public Sector Agencies subject to insurance attestation.
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Does the insurance attestation need to be managed or referred to the agency's Audit and Risk Committee?

There is no requirement for the attestation to be managed or referred to the Audit and Risk Committee.
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What is the role of VAGO in terms of audit standards for insurance attestation? Does VAGO verify areas of partial compliance?

The Insurance attestation, if included in the Report of Operations in the Annual Report, is not subject to VAGO financial audit.
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What is expected by VAGO from departments and large agencies in terms of valuation of self-insured retained losses?

All values in the financial statements would be included in VAGO's financial audit of the entity.
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My agency is insured under the Departmental funded insurance arrangements. How do I attest for the consultation procedure?

Public Sector Agencies need to respond to the procedures for which they are ultimately responsible.  In circumstances where a Portfolio Entity’s insurance cover is included or funded directly by a Portfolio Department, the Portfolio Entity needs to  assure itself (after consultation with the Portfolio Department) that their risk exposure has been appropriately assessed and can be adequately managed. This assessment should be based on the amount of risk the Portfolio Entity can bear and the appropriateness of any self-insured exposure.
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More information

For more information about insurance attestation, please refer to the Resources section or contact your Relationship Team on (03) 9270 6900.
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Insurance Attestation

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Page last updated: 24 April 2018