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The Local Government Mutual is a hybrid discretionary mutual, which means there are 2 layers of protection:
- The Mutual pools its income from members to cover the cost of low-level, expected losses
- There is a layer of insurance to protect against larger, unexpected losses and accumulation of losses
Members will pay a contribution into the Mutual to benefit from the protection it provides. The contribution will vary between councils based on the risks they bring to the Mutual.
As a discretionary mutual, the Mutual Board can also use its discretion to approve claims that fall outside a member’s terms of cover, if it considers this to be appropriate.
A member may leave the Mutual at the expiry of the protection period.
There is no charge to cancel your authorities membership at renewal.
Each member will have voting rights which it can exercise on members’ resolutions, including election of the Board of Directors. The Board will be made up of elected members and chief officers from member councils who will have a close interest in ensuring that the Mutual runs smoothly and efficiently.
No, the Local Government Mutual’s structure satisfies the Regulation 12 exemption under the Public Contracts Regulations 2015. An OJEU procurement is followed for the supporting insurance for the Mutual and its members.
The Local Government Mutual is a hybrid discretionary mutual which means that the Board has sole and unfettered discretion to agree to a claims, and if agreed, the amount to be paid. However, members can expect that all valid claims will be paid. The Board also has the discretion to agree to the payment of claims which fall outside the terms of the member’s protection. Unmeritorious third-party claims will be rigorously defended.
The management of claims will form part of the discussion with potential members during the admissions process.
In the first instance the disputes would be referred to the Board. The Rules of the Mutual will allow for further escalation.
Yes, we understand that many councils will have good working relationships with their insurance brokers and value their advice. Any local authority applying to the Mutual, or a member of the Mutual is of course fully entitled to retain the services of an insurance broker if they wish to and the Mutual has no objection to accepting business through brokers. The Mutual will not, however, pay commissions or make any other form of payment to a placing broker.
Identification and dissemination of information and advice on emerging risks will form an important part of the role of the Mutual. The mutual structure offers the advantage of flexibility in that the protection available is not constrained by market norms, although the range of protection provided clearly needs to be balanced with the exposure of the Mutual.