Councils will get legal right to set up mutual insurers
Local government minister Rosie Winterton will give councils powers to set up mutual insurers, after Brent council was found to have illegally set up the London Authorities Mutual Limited (LAML).
The government will amend Local Democracy, Economic Development and Construction Bill to will give “best value” authorities legislative power to join together to set up and participate in mutual insurance companies. The amendments will be debated at the report stage of the Bill set for 13 October 2009.
Brent council was told by the court that it did not have the necessary powers to set up LAML after a challenge by Risk Management Partners. Member councils participating in LAML claimed to have saved 15% on insurance premiums.
Make taxpayers' pounds work harder
Rosie Winterton said: "Councils have shown they are willing to make efficiency savings and are trying to think creatively about how achieve them. We will support them in their efforts to make every taxpayer's pound work even harder in the current economic climate.
“Councils have shown that creating their own mutual insurance companies can deliver savings, but following the LAML judgement we have taken the necessary legislative steps to ensure they have the specific powers needed to do this."
In response to the question "Should councils have a power to engage in mutual insurance arrangements?" the government had 96 responses showing:
- 82% agreed with the proposed power (36per cent also stated that they wanted a power of general competence for councils)
- 15% were neither for or against
- 3% were opposed
The mutual insurance powers will apply to English local authorities, National Park and Broads authorities, police and fire and rescue authorities, the London Fire and Emergency Planning Authority, joint waste disposal authorities, joint waste authorities, Integrated Transport Authorities, Transport for London, the London Development Agency, Welsh best value authorities, EPBs, and combined authorities
There were several other mutual insurance bodies established but not trading because of the legal challenge to LAML.
