Councils meet over insurance

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HUNDREDS of local authority finance officials met in London yesterday to consider what action to take in the wake of the demise of Municipal Mutual Insurance, the councils' principal insurer, writes Paul Durman.

Although MMI has resumed paying claims this week, Geoffrey Filkin, secretary of the Association of District Councils, said he did not believe the troubled insurer would be able to reopen to new business from local authorities. He estimated that pounds 300m of council insurance will need to be replaced over the next six months.

Richard Wales, of Touche Ross, outlined possible ways forward. These included setting up a new mutual insurer to be run on the councils' behalf by a professional firm; setting up a captive insurance company offshore to avoid the Department of Trade and Industry's solvency requirements; and bearing more of their own risks and using reinsurance to limit exposure to catastrophe losses.

Representatives of the council associations are to meet today to study the various options.

In the short term, councils will have to seek alternative cover in the market.