Brokers call for insurers to show goodwill to firms seeking EL cover

Insurance companies must start showing goodwill to employers over liability cover, if they want the government to solve the long-term problems of liability, Biba has warned.

Speaking ahead of yesterday's meeting with the ABI, Department of Work & Pensions and the Treasury, Biba chief executive Mike Williams said that insurance companies should try harder to find ways of providing cover to small companies that were threatened with closure because of sky-high premiums.

"Insurers should be persuaded to fund the risks in the short term," warned Williams.

If insurers did not make any attempt to fund the risks, Williams said they risked losing the support of brokers in trying to convince government to make changes to reduce long-term problems.

As Insurance Times went to press on Tuesday, Williams said the government could not solve the short term problems of small companies' employers' liability (EL) cover overnight.

Williams was set to present a number of long-term potential solutions to the liability crisis:

  • Law reform - changing the law to reduce exposure to risks

  • Tax relief - investments in health and safety should be rewarded

  • Liability cap - a ten-year limit to liabilities should be introduced to help stave off long-tail problems

  • No fault - similar to the New Zealand system. No fault has to be proved and a central pool pays out. This takes lawyers' costs out of the equation.

  • Equitas - put all existing liabilities into a run-off vehicle like Equitas

  • Pool Re - a reinsurance pool for liability risks.