The Local Government Association is considering setting up a mutual to save councils money on their insurance bills and improve cover.
Councils currently spend £650m a year on insurance, ranging from property damage and fleet cover to employers’ liability and protection against cyber-attacks.
The association is hoping to emulate the Fire & Rescue Indemnity Company which was set up in 2015 by nine fire authorities and achieved a surplus of nearly £500,000 in its first year of trading, equivalent to 12.5% of contributions.
The aim is for the mutual to be available as an alternative form of risk transfer for councils from 1 April 2018, when the majority of current local authority insurance arrangements fall due for renewal.
LGA chair Lord Porter (Con) said the association had been exploring options for a “cost effective alternative to the conventional insurance market products” for some time.
He said: “Mutuals are long-established and trusted. A local government mutual would save councils money and give members the chance to control and manage their risks, claims and cover more effectively.
“The mutual will only be successful if enough local authorities join it. A large number of councils have expressed an interest. The crucial next stage is for a sufficient number to come together as founding members to explore the option of mutuality and the practical steps needed to help a local government mutual open for business.”
In 2014 the LGA set up Public Sector Audit Appointments Ltd to run a national procurement to appoint auditors. The results of the procurement, which covered 484 of 493 eligible bodies, were announced last month and PSSA said it had saved the sector £6m on audit bills, equivalent to an 18% reduction in fees.