New review to assess insurer initiatives and the ATE market

The Office of Fair Trading (OFT) has launched another investigation into the liability insurance market, following on from its June 2003 report into the issue.The review will assess what impact insurer initiatives have had on the market, as well as carrying out research into the after-the-event (ATE) market for the first time.A spokeswoman for the OFT said the consultation period would end in late spring 2005, with the results expected fairly soon afterwards.Sources said the review was not expected, but Royal & SunAlliance technical manager, liability, Phil Bell said that insurers had little to worry about.Bell called on the government to have a "joined up approach" to employers' liability (EL) pricing, and to recognise that the new FSA capital requirements for a long term account would have to be taken into account when setting premium levels.The Engineering Employers Federation (EEF) applauded the review. It said the ABI's Making the Market Work initiative had had "little if any impact" on liability premiums for better managed companies. But the ABI rejected Booton's criticisms, with a spokesman saying that the ABI "never said it would revolutionise the situation".

The OFT's remit

  • Price developments
  • what current costs insurers are taking into account when pricing policies
  • what impact initiatives adopted by insurers are having across the liability insurance markets, including longer renewal periods and improvements to risk management so premiums more accurately reflect risk
  • whether there are any business sectors that are finding it difficult to obtain cover
  • the ATE market, specifically whether ATE premiums are contributing to the rise in liability insurance costs.