London councils get competitive on insurance » Bill payments » 24dash.com

Lambeth Council has joined forces with nine other London councils to form a radical new insurance consortium that is expected to save councils 15% on their existing insurance premiums.

The Local Authorities Mutual Ltd, the first public sector insurance “mutual” to be authorised by the Financial Services Authority for over a century, involves councils pooling their resources to provide adequate cover for all its members.  

By working collectively and combining a number of local authorities, the group is able to make more savings than would be possible individually, and attract the support of professional reinsurers who would not have an appetite to underwrite individual London borough risks in isolation.

This approach provides better value for money for the councils and the council taxpayer as it allows the savings generated to be used in the delivery of other council services.

One of the most important benefits for the mutual members is the greater input and control that they have in determining the mutual’s underwriting philosophy. This in turn encourages effective risk management.

Retaining control over their own capital and the prospect of sharing in any underwriting surplus makes practicing good risk management a top priority for each member.

Lambeth estimates that this new approach will represent a significant saving for the council, reducing the current premium by £200,000 per year.

“Local authorities have a significant turnover and face similar kinds of risks, so by working together we can collectively develop systems to reduce the chances of things going wrong in the first place, and make savings on both our insurance premiums and claims pay outs," said Mark Nicolson, Lambeth Council risk and Insurance Manager.

“We expect that being part of the mutual will represent savings for the council, which ultimately means more value for money for Lambeth’s residents.”

Lambeth Council has a strong track record in risk management. Measures introduced include the risk ranking of all Lambeth schools to assist them in reducing risks to both staff and pupils and a risk initiative fund that provides a source of funding to reduce risks across council services thus helping to make Lambeth a safer place to live and work.

Other initiatives include developing a set of risk management competencies to ensure that all staff have the right skills to manage risk.