Government set to 'wait and see' over EL

The government is set to dash the business community's hopes that it will immediately tackle the rise of liability insurance premiums.

According to 'The Times' the government will announce plans for a second, more detailed report, when the Department for Work and Pensions (DWP) and Office of Fair Trading (OFT) present their long awaited reports on Tuesday.

The insurance industry had hoped that ministers would unveil specific measures to tackle the crisis, which has resulted in many firms going out of business because they cannot afford rising employers' liability (EL) premiums.

The Times claims that ministers will say the problems in the commercial insurance market were more complicated than initially thought. They are expected to say they have been "overwhelmed" by the strength of evidence put forward by businesses and insurance groups.

Ministers are said to be keen on examining the idea of separating short-term liabilities, such as illness, from longer-term conditions, such as asbestosis. The government is also said to be keen on encouraging insurers to form "Pool Re" - a special pool of cover to back serious conditions to bring down premiums.

Business groups, which have lobbied the government about the EL crisis are said to be dismayed about the failure to take immediate action.

The Association of British Insurers has described high-priced employers' liability insurance as "unsustainable" as the government plan to release two reports on the issue.

Government ministers claim that the quadrupling of rates in the last 18 months makes Britain equal to other European countries but the federation say many small businesses cannot afford the rates or have been refused cover leaving many to trade uninsured.

Chairman of the FSB, John Emmins said: "Ministers can't simply bury their heads in the sand and hope that this problem will go away."