United approach to solving the crisis
In a bid to provide businesses with a quick solution to the liability crisis, insurers, brokers and trade associations will form two joint working parties.
One will create industry-specific guidelines on insurers' health and safety requirements; the other will collect data, on areas such as accidents and claims, to be used by underwriters when setting premiums.
The decision to create the working parties was taken on 6 September at a meeting held by the ABI and Biba, and attended by about 100 trade association and government representatives.
The groups will be set up "as quickly as practicable," according to an ABI spokesman.
The ABI will also study workplace compensation schemes worldwide as a longer term solution to the cover shortage.
PI crisis for IFAs
Independent financial advisers (IFAs) are being forced out of business because they cannot comply with FSA mandatory professional indemnity (PI) insurance requirements. Some IFAs have been unable to obtain the levels of cover required by the IFA. Others face premium increases of up to £70,000.
PI insurers have become very nervous about covering IFAs following scandals over pensions mis-selling and endowments. There has also been a steady contraction in the PI market, resulting in severely reduced competition.
Businesses drop D&O
Airmic has warned that many companies are going without directors' and officers' (D&O) cover rather than pay increased premiums. Airmic executive director David Gamble said businesses were reviewing costs and choosing not to purchase D&O cover on the basis that it was not worth it, as they had not suffered any problems in the past year.
Gamble blamed rising premiums on the dominance of US companies such as Chubb and AIG, who, he said, were inflating worldwide premiums on the back of poor US claims and the fallout from Enron and WorldCom.
HSE steering group
The HSE is to form a steering group to examine ways to alleviate the liability crisis.
The first meeting of the group will take place towards the end of September and will include representatives from the Department of Work and Pensions, the DTI, the Treasury and the insurance industry.
The central question to be considered is whether insurers can offer lower premiums to those companies that follow HSE guidelines on reducing the number of workplace accidents.
Driver liability
Motor premiums could rise by as much as £50 as a result of recent EU proposals to make drivers liable for accidents with cyclists, regardless of fault, says the RAC.
Under the proposals, contained in the Fifth EU Motor Directive, drivers' insurers would have to pay out, regardless of which side was at fault, for cyclists' medical and repair costs.
The plan has been criticised by motorist groups and insurers. The European Commission has said the proposals would not have a significant impact on insurance costs. Where the principle was enshrined in the laws of other EU countries, there had been no significant impact on premiums.
CRU remit extension
The Lord Chancellor's department is looking at proposals to extend the Compensation Recovery Unit's (CRU) remit to recover costs from a range of accidents, such as those involving employers' liability and public liability.
The CRU currently recovers from insurers the NHS costs of those injured in motor accidents. If the CRU's remit were extended, the extra cost to insurers could run into millions of pounds.
Railtrack plans pool
Railtrack is planning to set up an insurance pool by the end of September to prevent thousands of vital safety consultants going out of business due to lack of liability cover. Aon is currently working with several underwriters on the project, with the assistance of Railtrack which will not be taking a commercial interest. Railtrack hoped to offer employers' liability cover and public liability, albeit to a low level of indemnity.
