Business failures will illustrate problem's severity

Brokers are compiling a dossier of liability hardship cases to present to insurers and the government.

Biba, which is gathering the evidence, hopes to prompt urgent action.

Biba has already uncovered "dozens" of business failures caused by a lack of liability cover.

Biba chief executive Mike Williams wrote to members last week, asking them to respond by 31 July with examples difficulties in placing liability risks.

"There's no doubt there's a serious problem," Williams said.

"We've been informed of dozens of cases of firms going under."

He said Biba had been approached "sporadically" by members over the lack of all classes of liability cover since 11 September, but that activity had stepped up in the past five or six weeks.

"We've been getting an approach every day from brokers in despair, because they can't find cover, terms are horrendous and clients are going out of business."

He said the problem seemed to be spread across all shapes and sizes of business, with all insurers cutting cover.

Williams said Biba would collate the information to discover any trends or areas of particular distress.

He said Biba would then seek an urgent discussion with the Association of British Insurers (ABI) to try to agree some changes to alleviate the problem.

"We may need discussions with the regulator and possibly the Treasury to see if we need action from outside the industry," he said.

Biba chief executive Mike Williams is taking part in a BBC 24 discussion tomorrow evening (2 August)