History was made in the UK on 1 April when the first local authority insurance company established in over a century went live. After two years' hard work, and only after meeting a set of tough criteria laid down by the Financial Services Authority (FSA), the London Authorities' Mutual Limited (LAML) was open for business.

The London boroughs of Brent and Harrow will be placing business with the company from day one, while the eight other founding authorities (Camden, Croydon, Hammersmith and Fulham, Haringey, Islington. Kingston, Lambeth and Tower Hamlets) will follow over the coming months.

The mutual has been established, with funding from the London Centre of Excellence, in response to concerns about the limited number of local government insurance providers and the difficulties authorities in the capital face in achieving best value for their insurance premiums. It aims to bring down the costs of premiums by as much as 15% in a market hitherto dominated by just three providers, and forms part of the Government's wider efficiency drive for local government.

The business is overseen by a board of directors and is subject to the regulatory regime of the FSA. Ownership of the mutual is vested in the participating authorities – there are no shareholders – and underwriting profit is retained for their benefit, not that of third party shareholders. Its core business is property insurance, employer and public liability, and acting as an intermediary for motor insurance. LAML also aims to raise standards of insurance practice in local authorities by recognising good management of risk and rewarding those authorities that pursue effective risk management strategies.

Chair of the board of directors and London borough of Croydon treasurer, Nathan Elvery, said, "LAML is without precedence and represents a fresh injection of competition in the market. It's underpinned by a robust business platform and subject to a tough regulatory framework. … I am confident that it will provide an excellent service to its members."

Ken Cole, director of the London Centre of Excellence, commented, "This is an innovative project and shows how well local authorities can work together with the aim of generating efficiencies and raising standards of practice. The key to reaping the full benefits of the mutual is participation, as the more authorities that participate the greater the benefits for those participating will be. I'm sure both local government and the wider insurance industry will be watching developments closely."