20.07.17
LG mutual mooted to reduce £650m a year council insurance costs
The Local Government Association (LGA) has today announced that it is “exploring options” to set up a local government mutual to reduce the huge amounts that councils currently spend on insurance.
The mutual would support authorities to improve risk management through sharing best practice between different local councils.
Nationally, councils spend more than £650m a year on insurance, on claims around property damage as well as fleet cover to employers’ liability and protection against cyber-attacks.
The new mutual that the LGA is considering creating would aim to provide improved protection to LGA member authorities at a competitive rate – and would be owned and controlled by council members.
Other examples of mutuals in public service include the Fire & Rescue Indemnity Company, set up in 2015 by nine fire authorities, which achieved a surplus of £471,428 in its first year of trading.
The LGA stated that a mutual would be successful as it has an inherent interest in sharing best practice, and also supporting members to manage risks more effectively, leading to risk-related incidents reducing over time.
“Councils spend hundreds of millions of pounds on insurance nationally,” said LGA chairman Lord Porter. “They also routinely work together to share best practice and support each other to improve, but currently are limited in doing this by understandable confidentiality around insurance contracts.
“The LGA has for some time been exploring options for the development of a cost-effective alternative to the conventional insurance market products and services available to local authorities.”
Lord Porter also reassured councils that mutuals were long-established and trusted, and that 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,” the LGA chairman explained. “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.”
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