At the end of the Labour Party conference the government is looking at ways to restore public confidence. But, with six years of power behind it what has it achieved for the insurance industry? John Jackson reviews its record and gives his verdict
When the reinvented, repackaged and renamed New Labour came to power in May 1997 it was widely seen as the consumer's champion. It was 'I'm a straight sort of guy' Tony Blair at the helm now.
So how has the insurance industry fared under New Labour? Ministers have certainly listened to many concerns of the industry, not least on terrorism and flooding.
Following 11 September, the government made new arrangements for businesses to buy terrorism cover through Pool Re on a wider 'all risks' basis previously only available for damage caused by fire and explosion.
In addition, the government agreed to cap the maximum liability on terrorism for insurers as well as continuing to stand behind Pool Re as reinsurer of last resort.
The government also responded positively to industry calls for action on flooding - many householders were unable to obtain cover - by announcing an increase in total spending on flood defences of £150m by 2005-2006.
In particular, the government accepted the need for better co-ordination and planning of flood defence spending, ensuring that the money is directed to where it is most needed.
Another potentially explosive issue on which ministers acted was over fatal railway accidents such as Hatfield and Paddington, by introducing the offences of corporate killing and corporate manslaughter which will impact on directors' and officers' insurance.
Ministers also responded to the problems of employers' liability (EL) insurance, setting up a review, particularly examining the case for reform of workplace compensation, which identified renewal periods and more risk-based underwriting as key areas.
However, the Department of Health decision to recover NHS costs in personal injury cases is an added burden for EL insurers, with the ABI estimating it will add around 7% to premiums. Some firms have even been forced to trade illegally because they cannot obtain the appropriate cover.
Not surprisingly, the motorist has come under government scrutiny, and the decision to allow first offenders convicted of uninsured driving to escape disqualification was a very serious and irresponsible backward step.
On the plus side, insurers have welcomed the outlawing of the use of hand-held mobile phones while driving and the decision to undertake a review of the growing problem of uninsured drivers.
The ABI estimates that one driver in 20 is on the road without cover, costing insurers £500m a year and adding £30 a year to the average motor policy.
Moreover, the government has backed a sensible protocol that sets fixed fees for motor claims below £10,000 - but insurers have to pay more quickly. If successful, the scheme could be extended to cover many EL claims.
One group that has benefited substantially from the government is legal expenses insurers. Their helpline services assist businesses through the byzantine minefield of work-place legislation - much of which emanates from Brussels.
Such legislation has also led to an explosion in industrial tribunal cases, which a company can expect to ebe involved in at least once a year for around every 500 people it employs.
One of the biggest debits of the government was abolishing legal aid and bringing in the ambulance chaser's charter, the Access to Justice Act, which accelerated the compensation culture.
In effect, New Labour privatised legal aid and opened the floodgates to the after-the-event (ATE) personal injury claim bonanza to companies like The Accident Group and Claims Direct - both of which went spectacularly bust.
The Act was badly drafted and has led to insurers pursuing most ATE claims through the courts to establish the rules - even the courts don't know what a realistic rate is for an ATE premium.
Many of the measures introduced by the government (and the EU) since 1997 have made insurers wary of whom they will cover, determined to write only profitable business as interest rates continue to fall and insurance company investments plummet.
A non-insurable class of individual and commercial firm has sprung up as a result.
So what is the biggest lost opportunity of the government in the insurance sector since 1997?
In my view, bringing general insurance into the monolithic FSA missed a great opportunity to give the old Insurance Brokers' Registration Act statutory teeth, which would have left policing to the industry.
On the credit side, Labour has not increased insurance premium tax imposed by the former Tory government, but no chancellor will abolish it - this is easy pickings when required.
My verdict on New Labour and its impact on the insurance industry is a bit like the curate's egg - good in parts, but awful in others. Tony Blair gets five out of ten from me.
