ABI statistics underpin call for urgent action

Employers liability (EL) insurers will suffer a 140% increase in workplace compensation over the next 12 years, unless the current system is reformed, according to the ABI.

ABI statistics revealed that if the current EL system is not reformed, it will be bearing the majority of the cost of workplace compensation in the UK by 2015.

Research carried out by Greenstreet Berman on behalf of the ABI showed that the EL system currently sustains 25% of the cost of workplace compensation.

But this is expected to rise to nearly 60% in 2015 on a 'no change' scenario.

EL premiums will account for about 0.6% of employers' payroll costs by 2015, which represents more than a 100% increase on current levels.

Meanwhile, the Department of Health estimates that premiums will rise by a further 8% as a result of proposals in the current Health and Social Care Bill to recover the costs of NHS treatment for those injured at work.

The ABI has called on the government to revolutionise the EL insurance system.

ABI head of general insurance John Parker warned that "no change is no longer an option".

In his report to last week's ABI conference in London, Parker said "long term, the current system of EL insurance is unsustainable."

ABI research predicted that the current EL system would be bearing around 60% of the cost of workplace compensation in the UK by 2015.

As a result, Parker said the ABI was calling for a "fundamental reform of workplace compensation in the UK".

Parker also said that the current EL system was penalising the parties it was designed to assist.

"Claimants and their families, employers and insurers are all losing out under the current system of paying for workplace compensation.

"Insurers face increasing difficulty in setting premiums for the unknown and a growing number of unpredictable risks."

Parker added that the manner in which disputes were settled was too adversarial, resulting in delays as well as discouraging the effective and timely access to rehabilitation services.