Business and insurance trade groups increased pressure on the Treasury this week to put an end to the current crisis in the liability market.
The Federation of Small Businesses (FSB) called on the ...
Business and insurance trade groups increased pressure on the Treasury this week to put an end to the current crisis in the liability market.
The Federation of Small Businesses (FSB) called on the Treasury to use revenue generated by increased insurance premium tax (IPT), resulting from rising rates, to create an employers' liability (EL) pool.
Meanwhile, Biba and the ABI organised a meeting of all trade bodies to discuss diminishing availability of liability cover.
Biba also sought a meeting with the Treasury's insurance experts this week to discuss the issue.
And the Association of Consulting Engineers (ACE) said the DTI was monitoring the situation, nervous of its effect on inflation.
The FSB proposed six moves to ease the insurance crisis, including the restriction of EL to "event-based work problems" and more realistic award levels.
It also advocated payment of insurers' costs by unsuccessful prosecuting solicitors in no-win no-fee cases.
It also proposed that businesses review their risks in a bid to reduce their premiums, while insurers should take good health and safety procedures and no claims records into account when considering whether to give cover.
FSB national chairman John Emmins said some of his 170,000 members faced a stark choice - trade illegally or shut down, because they could not obtain EL cover.
He said the Treasury predicted it would raise £1.9bn from IPT in 2002/2003 - the same amount it raised in the previous year - but rising insurance premiums would make this a very conservative estimate.
"The FSB proposed that in 2002/2003 any IPT taken over the projected £1.9bn should be used for a pool of EL insurance backed by the government," Emmins said.
"The chancellor should demonstrate his commitment to Britain's 3.7 million small firms and act now."
Association of Consulting Engineers' spokesman Andy Walker said rocketing professional indemnity premiums were being passed on to consumers.
"They're leading to higher costs for firms and at some point those have to be transfered to their client and ultimately the end user.
"And the last thing the government needs is upward pressure on inflation."
Biba and the ABI will hold a half-day conference in London on 6 September to address trade association representatives from all sectors on the liability squeeze.
The Confederation of British Industry (CBI) is unconcerned by the unavailability of liability cover, saying its members have been able to find the money to cover the increased premiums.
A CBI spokesman said it had consulted its membership, which included insurers, on the issues. "We'd say there's a problem, but it's a problem about price, not availability," he said. "It's just a matter of bearing with it."
