Financial secretary to the Treasury Ruth Kelly responded yesterday to concerns over employers liability insurance costs.
David Taylor, MP for North-West Leicestershire, said in the House of Commons yesterday that small care home owners had expressed concern over rising premiums.
He said: "Is it not possible that the insurance industry, in a panic response to its problems, is escalating premiums beyond what is reasonable, and therefore driving some small businesses to the wall?"
Kelly responded: "I am aware that small businesses have been severely affected in some instances by recent sharp increases in the cost of liability insurance. That may have been the result partly of underpricing the premiums in the past, partly of an increase in the number of claims and litigation cases, and partly of the fallout from 11 September on the insurance industry."
She added: "It [the Office of Fair Trading review] will establish a basis of evidence before proceeding further on all of these issues.
"The Office of Fair Trading is also considering the evidence to see whether there are competition issues in the market. It will report later this spring."
