Move adds to growing mutual activity in UK
Fire & Rescue Authorities (FRA) can obtain provision of their insurance through the new Fire & Rescue Authorities Mutual (FRAML).
This follows a joint initiative between Firebuy, the national procurement organisation for the Fire & Rescue Service (FRS), Public Risk Management (PRM) and Charles Taylor Consulting.
FRAML, which opened for business from 1 September 07, is owned and run solely for its members’ interests with nine FRAs signed up so far. FRAs face similar pressures on budgets as the rest of local government and this initiative is driven by the need to achieve efficiencies.
Obtaining insurance cover through a mutual is a well practiced route to market in many countries across the world, especially in Australasia and the USA. There are small pockets of mutual insurance activity in UK (notably in the higher education sector) and more recently there has been the successful launch of the London Authorities Mutual (LAML).
Liz Barron, Firebuy’s chair said: “Setting up FRAML is yet one more area where Firebuy is actively pursuing real savings and improved standards for the benefit of FRAs, firefighters and the people they serve. FRAs already signed up to FRAML are to be congratulated for looking to the future and seeing this as another opportunity to contribute to the modernisation of the FRS”
Joe Clowes, chairman of Public Risk Management said: “The commercial insurance market for FRAs has always been limited, with little or no effective competition for the business. Also, FRAs had traditionally been charged premiums based on the risk profile of Local Authorities when their own risk profile was very different (and in most cases better).The very detailed data analysis that we undertook confirmed this and that FRA insurance procurement did not represent value for money”
Martin Fone, chief executive of Charles Taylor’s non-marine mutual department, said: "CTC is very proud to be associated with this exciting initiative. This is the second authorised mutual we have been instrumental in creating for the public sector in the last 6 months. We applaud the foresight and commitment of Firebuy and the participating members in developing an insurance and risk management vehicle which not only delivers budgetary savings and reduces the frictional costs associated with insurance purchasing but also maximises the financial advantage of managing risks pro-actively and effectively".
David Howells, chairman of FRAML’s board of directors and also director of corporate services for Hampshire FRA commented: “This initiative started when a handful of FRAs recognised the potential for some economies of scale if FRAs collaborated when obtaining insurance cover. We believe that forming our own mutual companion on a national scale will deliver the greatest savings in the longer term. It is fair to say that participating members are fairly risk-adverse and didn’t enter into this lightly but we now have approval from the Financial Services Authority and look forward to our first year of operation.”
