One in four businesses are taking deductibles to reduce premiums

New research has revealed that almost one in four businesses are taking informal deductibles on their employers' liability (EL) policies in a bid to reduce premiums.

The survey of 800 Engi-neering Employers' Federation (EEF) members found that 23% are using deductible arrangements, with the average deductible at around £7,000.

Gary Booton, director of health, safety and environment at the EEF expressed concerns that such arrangements “could expose companies unwittingly to longer term liabilities”.

“Companies are responding to the flaws in the system with short-term fixes such as using the deductible arrangement to manage small claims, but this is a far from ideal solution.”

The EEF also expressed concerns that the ABI's Making the Market Work initiative, which aims to ensure businesses with good health and safety practices are rewarded with lower premiums, was not working. Its survey found that of the 25% of companies that have externally verified their health and safety management systems, 80% of these said this had no impact on their EL premiums.

Booton described the finding as “particularly disappointing”.

“The insurance sector needs urgently to re-examine its approach in this area,”
he said.

An ABI spokesman hit back: “When we set out Making the Market Work we didn't promise overnight results.”

The average year-on-year EL premium increase among those surveyed was 23%, with a quarter of respondents seeing rises of 30% or more.

But the ABI said that its research showed the average increase for business was 15% and falling.