Since 2004, UK firms have not increased their levels of insurance protection limits purchased despite increased litigation action, product recalls and supply chain risks, according to Marsh.
In its annual global study, Limits of Liability 2006, Marsh found when comparing companies year-over-year for three years, the average limits purchased increased by only 1.8% in 2006 to €67m, the same figure as 2004, after decreasing to €66m in 2005.
Andrew Keefe, a senior vice president in Marsh's European Casualty practice said: “New legislation, such as the General Product Safety Directive for product recall and the Sarbanes-Oxley Act, means companies are under increasing scrutiny and pressure in their day-to-day business. Even though firms continue to maintain their levels of insurance protection this year, they need to recognize that they are buying insurance today to cover losses they might have to pay five years from now or more.”
The smallest UK firms in the study – those with annual revenues of €200m or less – increased their average limits to €30m in 2006, from €29m in 2005, which was in line with the European increase.
Mr Keefe said: “The UK and Europe are following a global trend of a declining cost and flattening liability limits. The average price for €1m of coverage purchased among UK firms declined, falling to €9,427 in 2004 to €6,533 in 2006.”
