Government proposals to scrap legislation requiring employers to keep a record of their insurance policies have been met with concern by insurers and lawyers.
In May the Government published a review announcing plans to scrap the requirement for employers to retain their employers’ liability policy records for a minimum of 40 years.
It argued the current regulation could not be enforced and represented a “major burden” to business.
The move was met with a mixture of surprise and anger by the insurance industry. The ABI said the government had failed to make the case for scrapping the regulations. Biba said the proposals were without merit.
Meanwhile claimant lawyers argued the plans would lead to injured workers being deprived of compensation.
The current legislation, which came into force in 1999, requires businesses to keep their Employers’ Liability Compulsory Insurance policy records for at least 40 years.
The Government argues that the rules, in their present form, do not achieve their intended aim of ensuring the preservation of records. It also says that the effective enforcement of the current regulations is neither practical nor possible.
It therefore proposes to remove the regulation and advise businesses to keep records for their own benefit.
A Department for Work and Pensions (DWP) spokesman says: “Eligible businesses will still have to hold employers’ liability insurance and would risk a £2,500 penalty for every day without cover.
“The regulation being revoked is ineffective as it carried no penalty for non-compliance and did not apply to business that had ceased to trade.”
The Association of Personal Injury Lawyers (Apil) and Biba both say that they will be urging the government not to proceed with these proposals. Biba has assembled a full technical committee to look into the matter.
Both organisations argue that the requirement to keep insurance records gives access to justice for workers.
Apil says the regulation is vital for workers who contract so-called ‘long tail’ diseases from their employers (such as the fatal asbestos-related cancer mesothelioma, which can take 30 or 40 years to develop in the body).
It argues that rather than removing the regulation, the Government should introduce a database of workplace insurance policies.
Neither the ABI nor Biba thinks a database is feasible. Both cite the cost of such a database as prohibitive.
The ABI says that there is “no viable alternative” to the current system, while Biba says that tracing historic liability insurance policies can be difficult even under the current regulations and would become even more so if the regulations were removed.
The DWP is keen to stress that employees will not be left without insurance cover: “A business that can't prove it held insurance for the period of a claim may find itself meeting legal and compensation costs for illness or injury rather than the insurance company.”
But Biba argues that the value of a requirement to retain insurance policy records is that it can prevent claims from going to court.
