The Department for Work and Pensions (DWP) is "looking into" allegations that employers' liability (EL) policies being sold by Irish insurer Quinn-direct may be in breach of the Employers' Liability (Compulsory Insurance) Act 1969, according to a source close to the government.

Quinn-direct opened an office in Manchester late last year to sell EL policies to high-risk industries such as construction, building, engineering, quarries, demolition, scaffolding, manufacturing and haulage, according to its website.

But UK insurers have warned that exclusions contained in Quinn-direct's EL policies - such as asbestos and hazardous works including work carried out at a height of more than 15 metres and excavations below three metres - may put such high-risk policyholders in breach of the Act.

According to its website, Quinn-direct also gives its EL policyholders a choice of excess options, which are written into the policy. Other insurers believe this may also contravene the Act as regulations written into the Act in 1998 prohibit "any condition which requires an insured employer to pay the relevant employee".

A spokeswoman for the DWP said it had not received "a formal complaint about any company mis-selling insurance policies".

But the spokeswoman said: "The regulations are clear about the terms of EL insurance. It is not lawful to sell a policy that doesn't comply with regulations. However, the regulations do clearly prohibit certain conditions and exclusions from being written into EL contracts."

Quinn-direct, which is regulated by the Irish Financial Services Regulatory Authority and has a passport from the FSA to trade in the UK, was unavailable for comment when Insurance Times went to press.