The cost of employers' liability continues to rise...
The cost of employers' liability (EL) continues to rise, according to the British Chambers of Commerce (BCC).
In a survey of 600 members, the BCC found that nearly three-quarters had experienced increases in their EL costs in the past 12 months. One-third of these firms have suffered a rise of between 20% and 50% during this period.
BCC director general David Frost said: “The high cost of EL insurance is having a direct and sustained impact on UK business.
"Seventy per cent of our members questioned have seen profits cut as a result of these increased costs and nearly one-third have been forced to cut investment.
"Manufacturing firms have been particularly hard hit, with 40% of companies reporting that EL costs threaten their long-term viability.
"Firms in this sector are already operating at the margins and EL increases threaten to tip them over the edge. The EL market has clearly not stabilised.”
Frost said: “A substantial proportion of businesses (40%) are given no justification whatsoever for the increase in their EL premium, while others are simply told that it is due to the ‘general state of the market' (25%).
"This is not acceptable. The level of a firm's EL premium should essentially be based on two factors: the health and safety record of the company and the risk management practices that they have in place.
"However, of the 40% of firms that had put in place a risk assessment strategy, almost half (48%) found that it made no difference to the level of premium they were paying.
“Action is needed to address this situation. Businesses should implement a risk assessment strategy as part of good practice, but they should also expect insurers to ‘reward' such a strategy with a fair and accurate premium.
"We would therefore like to see the government develop and implement a national health and safety index that will help firms to assess genuine risk and communicate this to insurers.
"In addition, we would like to see a greater emphasis on rehabilitation. Rehabilitation has the potential not only to reduce costly lump-sum compensation settlements, but also to return individuals to work sooner, with knock-on benefits for the employee, employer and the UK economy as a whole.”
BCC is currently working on a scheme that aims to provide its members with access to more favourable rates of EL by pooling risk across businesses in the chamber network. BCC expects to complete this work over the coming months.
