The Office of Fair Trading (OFT) has launched an investigation into the UK liability insurance market, after pressure from small business groups.In particular the OFT will examine the large increases in premiums in employer’s liability insurance, reported reductions in underwriting capacity and increases in excess required by insurers all of which have been hitting small businesses hard.
The OFT’s investigation comes after a repeated calls to the chancellor to tackle the problem and, last week, a new report revealed huge numbers of business in the UK are trading without insurance cover because of increasing premiums
The Federation of Small Businesses (FSB) has been invited to take part in the study and John Emmins, national chairman of the FSB, said he was delighted that the OFT has decided to investigate liability insurance market and was confident it would encourage the government to act.
“We have been saying since August that the market for liability insurance has failed.
“Significant numbers of small firms continue to find it impossible to secure employer’s liability insurance at any cost and face the stark choice of making staff redundant or operating illegally,” he said.
However the TUC General Secretary John Monks said that, though the liability insurance market needed reform, it should not be at the expense of victims.
"Employers have got away with insurance on the cheap for far too long, and workers and consumers have picked up the tab as victims or taxpayers," he said.
The enquiry will run concurrently with a review of employers’ liability insurance currently underway at the Department for Work and Pensions and the OFT aims to publish a report in spring 2003.
