Matthew Brace

London Transport has established an insurance company to provide cover for its 5,000 red buses as it gears up for privatisation this year.

Dublin-based Routemaster Reinsurance will offer third party protection as well as public and employers liability. LT had previously been large enough to insure its own buses.

Clive Pracy, head of risk management, said the company would prevent competition between smaller private fleets being stifled by lack of affordable cover. 'Obtaining insurance for large bus operators is a real problem. The major insurance companies are no longer normally willing to insure large bus companies and there is only limited capacity, mainly from one or two Lloyd's syndicates.'

Each of the 10 companies due to be created between September and December will be an equal shareholder.