A group of councils has taken a further step towards creating a mutual with the intention of saving money on their insurance bills and improving the level of cover they get.
Councils spend about £650m a year on insurance, ranging from property damage and fleet cover to employers’ liability and protection against cyber-attacks.
LGC reported in July last year how the Local Government Association was considering setting up a mutual in the hope of emulating the Fire & Rescue Indemnity Company which was set up in 2015 by nine fire authorities. That achieved a surplus of nearly £500,000 in its first year of trading, equivalent to 12.5% of contributions.
The LGA’s insurance mutual was yesterday incorporated as LGAM Limited. Incorporation is the legal process used to form a corporate entity or company.
A spokesman for the association said: “The LGA is working with a group of councils to form a new mutual that will offer an alternative to the existing insurance market for local authorities, enhancing choice and promoting the sharing of best practice in risk management.”
They said founding member authorities “will be able to formally join” the mutual “in the coming weeks and months”. It had previously been hoped the mutual would be fully operational by April 2018.
“The next step will be for the mutual to procure support services to enable it to develop its business case and operating model, so that it can in due course offer appropriately priced risk cover to local authorities,” the spokesman said.
Last year LGA chair Lord Porter (Con) the mutual “would save councils money and give members the chance to control and manage their risks, claims and cover more effectively” but warned: “The mutual will only be successful if enough local authorities join it.”