Employers’ liability (EL) premiums could fall when the smoking ban comes into force next month, insurer Novae has predicted.
Novae said it had slashed its EL premiums by 25% for Scottish businesses, where there was no longer a passive smoking risk for employees as a result of the ban, introduced last year.
It said it would expect similar cut in rates for businesses such as bars, pubs, nightclubs, when the ban comes into force in England on 1 July.
Nick Ventham, liability manager at Novae Group, told Insurance Times that with good actuaries in place, insurers should be able to free-up reserve capital and reflect it through reduced rates.
“Going forward these sorts of claims by nightclub or pub employees will no longer be made. So we do not need that money set aside and our actuaries have translated that to premium savings.”
Ventham said that the improved risk environment could encourage more insurers to enter the market.
“More insurers are going to come in thinking ‘I can write this type of business. I am not so worried about long-tail risks connected to passive smoking.’”
But other insurers played down the impact of the smoking ban on EL rates.
Norwich Union consultant risk manager Phil Grace, said: “We have not reduced our rates for Scotland and we are not going to reduce them for England.”
Grace added that compensation claims arising from passive smoking were relatively rare and usually the remit of an employment tribunal.
“When it reaches that stage, they state that their rights as an employee have been infringed,” he said.
Grace reiterated that passive smoking related diseases have always been difficult to prove because many workers in the pub, club, bar sector were casual staff who would find it difficult to track down previous employers, five or 10 years down the line.