An employers list operating like the motor insurance database would provide a means to enforce employers' liability cover, says Stuart Stead

We all know the reasons and benefits of the recent EU 4th Directive and the creation of the motor insurance database for the reporting of all motor vehicles.

Yet employers' liability (EL) could benefit from a similar scheme.

The Employers' Liability (Compulsory Insurance) Act 1969 came into effect in 1972. This Act established that employers in the UK must hold liability cover for their employees to provide a compensation benefit for those having the misfortune to suffer death, disease or bodily injury arising from their employers' negligence.

What happens when an employer, faced with spiralling EL costs, decides that he can no longer afford this cover?

Who, other than the Health & Safety Executive (HSE), checks that the employer is failing to maintain his statutory obligations?

Who informs employees that their employer is trading illegally?

These seem like straightforward questions but if left unanswered, an employee is ultimately the one who suffers following an industrial accident.

A simple national register of employers would certainly remedy this situation and could involve the Inland Revenue, which could advise the FSA of those firms with a requirement for cover. The Revenue could also pass information on to the HSE for it to carry out enforcement and actively close illegally-trading businesses.

Another benefit to all insurers would be that of the tracing of insurers involved in long tail claims, such as asbestosis and vibration white finger. At present it can be a long and frustrating process. Although employers are now legally obliged to retain EL certificates for a minimum of 40 years, you can envisage that in reality some of these certificates would be missing.

I wonder how long it will be before such an idea is implemented by the current government, or will it be a case of waiting for our EU counterparts to instigate such measures with our own government following suit?

  • Stuart Stead is a broker with Business Insurance Solution