It's going to be the client's loss

There is a limit to how much longer the insurance industry can live in what has become a free-for-all legal madhouse. The ultimate loser will be the client - commercial or individual.

The state has rightly concluded that certain types of insurance should be compulsory. For individuals it is the motor car, and for companies it is employers' liability (EL).

Back in the 1960s, when the world was much saner, EL covered fairly basic industrial injuries such as trips and falls and similar common accidents.

It was not designed for the "sue first, think later" mad world of today, where insurers find that they are being taken to court for a whole range of problems that arose many years ago.

It is right that Joe Public should be fully protected. There are very good companies where health and safety is concerned, and some fairly rotten ones as well.

But a law brought in for a world that has largely gone needs radical overhaul. Both the Association of British Insurers (ABI) and the Health & Safety Executive want fresh legislation.

Those are two powerful voices, and they should be heeded. Currently the lawyers are having a field day. The no win-no fee madhouse has given legal eagles the licence to virtually print money as litigation mania takes hold.

But it is not the fault of the lawyers - or their litigation-hungry clients, or the TV advertisers who egg on the viewers.

It is certainly not the fault of the insurers or brokers.

It is urgent government action that is needed. Until the government decides to act - and don't hold your breath on that one despite recent talks between the ABI and the Treasury - the ball is still very much in the insurance world's court.

A basic principle to bear in mind is that while companies are required by law to seek EL cover, insurers are not legally bound to provide it.

That is a powerful lever in the insurers' hands.

Put another way, insurers (and brokers) need to get a good deal tougher on those companies that fall down on health and safety standards. The screws must be turned much tighter.

The decision of the House of Lords to uphold the Appeal Court decision against Norwich Union in Callery v Gray has added to the urgency for change in the law.

Insurance is seen by many litigants as an extension of the state benefit system, a cash cow to be milked until its financial teats run dry.

If companies cannot provide minimum standards then there should be no hesitation in refusing them cover.

The broker may lose a client, but if it is a bad client, the sooner the better.