The fledgling council insurer faces a blow to its survival

The insurance mutual for London’s local authorities could fall on the starting blocks, if a current court case forces it to compete with private sector rivals, a minister has been told.

Local authorities are currently allowed to appoint the London Authorities Mutual (LAML) without going through complex and lengthy public procurement procedures.

But this could change if a case brought by private sector competitor Risk Managing Partners (RMP) against Brent council succeeds.

In a letter to Local Government minister John Healey, LAML chairman Nathan Elvery said that while private sector insurers might welcome the collapse of LAML, because they see it as a rival, it is saving councils a significant amount of money, and the government has a duty to protect it.

In an administrative court hearing last week, RMP claimed Brent council breached the Public Contracts Regulations by abandoning a procurement exercise and awarding some of its insurances, which were subject to a tender process, to LAML, which had not been active in the process.

The case will not be resolved until the spring, at the earliest.

Elvery said that LAML saved local authorities some 15% annually on insurance costs, while giving them enhanced insurance cover.

LAML, which opened for business last April, is currently backed by 10 London boroughs, with three having full membership of the mutual, and controlling over £8m.

Seven other boroughs are set to become full members when their current insurance arrangements end.