The revival of local authority mutual insurers in the U.K.

This paper discusses recent attempts by U.K. local authorities to create mutual insurance companies. We explore in general terms the background to mutuals (or pools) in the U.K. public sector. We consider two specific and recent cases in order to tease out the key issues: a rejected feasibility study undertaken by a number of Scottish local authorities and a mutual formed by a consortium of London local authorities, the London Authorities Mutual Limited. Our analysis and comparison indicates that for some local authorities there remain a number of barriers to this form of innovation in risk financing. We conclude that while mutuals are not a panacea for local authority risk financing problems, they are an alternative worth exploring.