Government proposal makes insurers pay injured claimants' NHS costs

Liability rates will rise as a result of government proposals to force insurers to pay injured claimants' NHS costs.

At present insurers are charged for the NHS costs of road traffic accident victims, estimated to cost the insurance industry £105m a year.

The Department of Health is proposing to extend the current scheme to apply to employers' liability (EL) and public liability claims. This could cost insurers an additional £150m a year once it is fully bedded in, according to the government.

It is expected to come into effect by October 2006.

The final bill will be capped at £37,100 per claimant. The average outpatient costs the NHS £505 a day and inpatients costs £620, meaning that insurers could pay for up to 60 days in hospital.

Bob Rabbitts, technical claims manager for Allianz Cornhill, said: "This is yet another example of where successive governments are looking to place costs on insurers."

When originally proposed, the ABI forced the government to put the plans on hold, arguing that massive EL premium hikes were crippling small businesses.

But Rabbitts said the move would force EL rates to rise.

"Inevitably this has to be reflected in our premium rates," said Rabbitts. "Greater transparency is needed to say where this money is going. Insurers will not see any benefit arising from this. It is clearly another revenue stream for the NHS."