Engineering companies demand OFT investigation over EL insurance

Insurers are not trading illegally or immorally, the ABI has insisted, after manufacturers demanded the OFT investigate employers' liability (EL) insurers.

The Engineering Employers Federation has written to Competition and Markets Minister Melanie Johnson, urging referral to the OFT over the "failing" EL market.

"For some parts of manufacturing, companies are finding real difficulty obtaining EL cover at any price," federation director general Martin Temple said.

Temple said insurers restricted the market by refusing to write EL other than as part of a combined package.

He said the insurers did not share information on claims experience, forcing new cover providers to load premiums on unknown risks.

The ABI was reluctant to be drawn on Temple's accusations, saying it welcomed his call for " fundamental reform of workplace compensation".

However, an ABI spokesman refuted the implication that insurers traded illegally or abused the compulsory nature of EL cover.

"The reality is that we're trading in a way that reflects unprecedented claims losses," he said. "We're certainly not trading unfairly."

He said the federation had asked to join the ABI's health and safety working party.

Last week the ABI sent out a questionnaire to trade bodies that attended its EL seminar recently, asking what health and safety initiatives they provided.

Temple has called for a cross-departmental review of government policy's impact on the commercial insurance market, accusing the government of failing to use "joined up" thinking.

He said it was "inappropriate" for the Treasury to bank windfall gains from IPT at a time when rising premiums threatened companies' survival.

What engineering companies say about EL premiums

  • A construction engineer, after investing heavily in health and safety, still faced a 194% rise

  • A steel processing firm took out a three-year deal in 2001. The insurer cancelled the deal and increased the premium by 189%

  • A logistics business in Humberside paid a 100% increase for 2002. But this could rise to 275% during the year if payroll or sales volume increase regardless of claims

  • A Northern Ireland galvanizer saw a premium increase of 66% in 2001 and is facing another increase of £80,000 this year

    Source: EEF discussion document "The Future of Employers' Liability Insurance" (
    www.eef-fed.org.uk ).