Innovation and Efficiency

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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Comments

Cllr Peter Hughes   20/07/2017 at 14:26

This has to be a good prospect for Local Government, and could it not have a wider perspective, in terms of Public Sector Reform, if this was extended to and included other public sector services?? Mutuals and Co -operatives have to be looked at as beneficial options for Public Services having to find huge savings, with profits (if any) going to the public sector bodies (and effectively the public) instead of private shareholders who are purely in it to make money at our expense!

Stephen Laing At Assettrac   20/07/2017 at 14:51

In addition policy costs can be driven down further with the use of modern cloud based asset tracking systems providing accurate sums insured for buildings and contents, proof of ownership, and mobile device generated audit trails of safety inspections to improve productivity, maintain accountability and compliance with legislation.

Cllr Tom Maddison   20/07/2017 at 17:24

I echo 100% the thoughts and words above of Cllr Peter Hughes. Mutual and Co-operative models for providing efficient , democratic and cost effective services have been overlooked for far to long. With surplus and profit being returned to the sector and members it serves it really is a sensible approach and option both now and in the future.

Anonymous   06/08/2017 at 01:30

I presume you are all aware of the collapse of the last public sector mutual - MMI? We continue to pay for the losses of this as taxpayers. What evidence has been released regarding the new mutual that accurately demonstrates the savings it can make? How has it considered the future losses that commercial insurers are offering protection against? By all means consider any methods of risk financing but surely you are not all gullible enough to just fall for some marketing spiel claiming savings with no evidence?

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