Recommendations may prompt market exodus of sector players
Senior industry figures fear the Department for Work and Pensions (DWP) review into employers' liability (EL) insurance will not provide adequate solutions to the problems facing the market.
They fear that if the review promotes quick-fix solutions or puts responsibility for solving the problem back on to the industry, some insurers could withdraw, prompting a market failure.
ABI liability committee chairman Geoff Riddell said when the ABI began looking into the EL problem, it discovered all insurers involved in the UK EL market had discussed at boardroom-level the possibility of exiting the market.
Riddell, who is also Zurich Financial Services chief executive, said without government support, the industry would not be able to find a solution.
He described getting the industry to work together as like "herding cats".
TUC senior policy officer Owen Tudor said several government departments, including the DWP, Department of Health and Treasury would need to become involved to ensure an effective solution.
Engineering Employers Federation director-general Martin Temple agreed. He said that, ultimately, the industry might need to lobby the Treasury to get the government support required, as he feared that the DWP "did not have the heart"to take the steps required to solve the problem.
Tudor said an increased emphasis on the role of rehabilitation would be needed in any new system. He said the TUC was looking at signing up to the IUA's rehabilitation code later this month in order to promote to its members the use of rehabilitation at the early practical point in the claims process.
Biba liability committee chairman and Willis executive director in global markets David Thomas, advocated the creation of a national infrastructure for rehabilitation through the NHS. But he said that cross-departmental government support would be required to create such a scheme.
The DWP is expected to announce the outcome of its review in late spring.