In a heavy blow to those who hoped to reduce the cost of insuring local authorities by devising an arrangement similar to the old Municipal Mutual, the Court of Appeal has ruled that the arrangement is ultra vires and that any participating local authority should have followed the competitive procedure laid down in the Public Contracts Regulations 2006.

The full judgment of the Court of Appeal can be read here. It is now thought likely that before any further attempts are made to set up a local authorities' mutual, legislation will be needed. 

The London Authorities' Mutual Ltd (LAML) was created by London Boroughs to provide insurance in respect of corporate property, terrorism and liability risks of London Boroughs and commenced assuming risk on 1st April 2007 with seven London Boroughs.