Industry admits it failed to spot current difficulties
Insurers will meet Economic Secretary Ruth Kelly and Work Minister Nick Brown to discuss the future of employers' liability (EL), as industry leaders admitted they failed to spot the looming crisis.
The ABI held a meeting with union and trade bodies and government representatives last Friday to discuss the long-term sustainability of the EL market.
Meanwhile, the panel of liability experts at the Strategy 2002 conference in Newport admitted they did not identify the growing problems in liability fast enough.
Zurich corporate and government managing director Geoff Riddell chaired the ABI meeting.
Riddell said the attendees identified accidents, disease, pricing pressure, rehabilitation and crediting good health and safety practices as key issues.
The ABI commissioned consultants to research the market.
The research showed the value of the average EL claim had trebled in the past six years.
It also showed insurers paid more than £1bn toward the £5.5bn cost of UK workplace compensation in 2001.
The ABI will present the research to the Treasury, DTI, Department of Work and the HSE as soon as possible.
ABI general insurance head John Parker said: "There are some very serious strains in the EL system and there needs to be proper debate with the government about whether it's sustainable."
Riddell said a sensible review of the current EL system was needed, rather than "silver-bullet pontification".
Meanwhile, at Strategy 2002, AXA Insurance chief executive Peter Hubbard said insurers did not see the current liability problems creeping up.
"It shouldn't have taken so long for us to see it, but it happened partly because we can be overly optimistic as an industry and not really understand some of the drivers in our business," he said.
PRI Group chief executive Andreas Loucaides said insurers poorly communicated the changes to its policyholders.
"We've not been able to price our products as well as we should. We've had lurches that haven't been good for the industry or policyholders and we've tended to not take any notice of them," he said.
"We haven't managed claims inflation, disease and legal costs and we haven't ensured a fair average price over a number of years as quickly as we should have."