The new organisation, which will seek to register as a charity, will only serve voluntary organisations. It aims to offer tapered discounts to charities with no claims starting at 20 per cent after one year, rising to 50 per cent after five years.
The move follows a study carried out one year ago, that found charities received only 20p back for every £1 spent on premiums, compared with between 50p-60p for public and private sector organisations. It also found there was not a relationship between risk management actions by charities and the level of premium increases.
Charity Logistics, which undertook the study, are among the partners in the consortium behind the new organisation. An unnamed charity umbrella body is also involved.
Charities have suffered a torrid couple of years in the insurance market, marked by frequent, hefty hikes in premiums, which have driven some out of business.
Charity Logistics initially led a feasibility study into whether an insurance mutual for the sector should be set up. That idea has been shelved, with chief executive George Cook claiming the new idea is "even better".
He added: "Whatever the market price is for the charity concerned, we aim to offer the same insurance cover at half that price after five years.
Charities tell us that many of them make no claims at all and yet, bizarrely, their insurance premiums rise.
"Charities with good risk management are not able to achieve premium reductions.
"We can understand the reasons for this. Insurers have made huge losses in other sectors and will need to make up this loss. We will be investing in a vehicle that does not have that history, nor that expense in other markets."
Cook said the new insurer would offer corporate insurance with the same no-claims discount that is currently only available to motorists.
Charities have expressed interest in the new initiative. Kevin Lawrence, UK programme manager with overseas development charity Harvest Help, said: "It's cautiously encouraging. We are happy to talk to any insurer about reducing premiums because ours have gone up significantly. If the profit motive were taken out, that would be reflected in premiums. But we have specialist insurance needs."
Jehangir Ghandhi, head of finance at Water Aid, commented: "I'm all in favour of something like this for the charity sector, but we don't want something that doesn't have substance."