Fire services form insurance firm

4 Oct 07
Fire and rescue authorities across England have joined forces to form their own insurance company.

05 October 2007

Fire and rescue authorities across England have joined forces to form their own insurance company.

The Fire and Rescue Authorities Mutual Ltd opened for business this month. It comprises five authorities: Royal Berkshire, Cheshire, Devon & Somerset, Hampshire, and Kent & Medway Town.

Its launch confirms a trend of authorities collaborating to provide their own business services, such as the establishment by ten London boroughs in April of insurance firm London Authorities Mutual.

There are concerns that the insurance market for authorities does not always offer best value for money. The consultancy Public Risk Management analysed how fire authorities procure insurance and found that they tended to be charged premiums based on the risk profiles of local authorities, when their own risk profiles were very different, and often better.

David Howells, chair of Framl's board of directors and director of corporate services at Hampshire Fire and Rescue Authority, said the initiative was prompted by the need for authorities to secure greater economies of scale.

'We were persuaded that forming our own mutual company on a national scale would deliver the greatest savings in the longer term,' he said.

'It's fair to say that participating members are a risk-averse bunch, 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.'

Joe Murphy, director of sales and risk management for Zurich Municipal, a leading supplier of insurance services to the public sector, said he understood the attraction of the mutual concept for local authorities, given the pressures on public finances.

But he warned: 'Projected savings… are just that, as these cannot be compared against the longer-term risk of a mutual's requirement for additional funds.

'Anticipated best value must be considered alongside risk and uncertainty and the critical mass required to absorb the impact of catastrophic loss, particularly in the early years.'

PFoct2007

Did you enjoy this article?

AddToAny

Top