A crisis in the supply of liability insurance is being investigated by the Financial Services Authority (FSA).

The move follows a meeting between The Underwriter chief executive Keith Rutter and FS ...

A crisis in the supply of liability insurance is being investigated by the Financial Services Authority (FSA).

The move follows a meeting between The Underwriter chief executive Keith Rutter and FSA managing director John Tiner earlier this week.

At the meeting, Rutter presented Tiner with evidence that a shortage of employers' and public liability cover is causing businesses to fold. "The problem is particularly acute in the construction industry," he said.

Rutter said that Tiner was aware of the problem. "He has just come back from Australia, where there is a massive problem. He was aware that there is a head of steam building up here."

He added that Tiner promised to investigate the problem over the coming week.
The Broker Network managing director Grant Ellis confirmed that businesses are going under because of a shortage of liability cover.

"Each of our 110 members says they have two or more companies that have gone out of business over liability cover recently," Ellis said.

"There are massive problems because the composites are philosophically opposed to liability business and the London Market is rapidly running out of capacity," he added.

Towry Law managing director Martin Wright also said that finding liability cover is a massive headache. "No-one wants to renew cover so the best we can do is get some long extensions - typically for two to three months," he said.

A number of Lloyd's syndicates have suspended writing new liability business including RJ Wallace, Abacus and Syndicate MWL 2245. London Market companies such as The Underwriter have also reined back their liability offerings.

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