The EL crisis has not affected most SMEs. In fact, 96% of them say they have had no trouble in obtaining cover. But results in Zurich's SME Index, which monitors confidence levels among SMEs on a quarterly basis, reveal that 79% are concerned about rising insurance premiums

In the current employers' liability (EL) cover crisis, one could assume that SMEs would be feeling the pinch as well.

But exclusive new research from Zurich reveals that 79% of SMEs are more worried about affordability than availability of EL cover.

David Smith, distribution and marketing manager for Zurich's UK commercial business, says: "While we recognise that a small minority of businesses are having difficulty in obtaining cover, this result confirms what we believe to be the key issue in the current EL market - not availability, but affordability.

"What customers now need to know is what they can do to control their EL premiums."

Zurich has worked with brokers over the past year to explain the reasons behind rate increases. Now the insurer is asking brokers to help customers understand the measures they can implement to help to take risk out of the business, and contain residual risks.

All of this will impact on future insurance costs.

Smith says: "There are three main areas that affect the pricing of EL policies: external economic conditions; the legal climate and effective risk management.

"Companies can do little to influence the first two categories, but the third is very much in the hands of each business."

Zurich is asking brokers to highlight the following steps that businesses can take to improve their control of risk and contribute to containing future insurance costs:

  • In order to implement effective risk management, a business needs to understand where risk comes from. The best way to do this is to undergo a risk management audit, which will help identify risk and suggest ways to remove risk or mitigate its consequences

  • There are recognised occupational health and safety management system specifications available, such as OSHAS 18001 and the HSE document HSG65, which provide advice on successful health and safety management. A business that introduces and maintains effective risk management in accordance with guidance of this nature (particularly if it seeks external accreditation) will be able to offer to an insurer evidence of a sound approach to occupational risk issues

  • Leading on from these systems and audits, specific and tangible actions to improve risk can be built into an effective, rolling planned programme.

    Smith concludes: "At Zurich we have risks where the EL premium quoted has been influenced by the ability of businesses to show evidence of health and safety improvement utilising the management systems mentioned above as a base.

    "While some companies may see the introduction of effective health and safety measures as a potential burden, all the available evidence is that good risk management makes good business sense.

    "In a business climate in which there are increasing demands for business to be able to evidence corporate social responsibility, effective risk management of occupational issues is high on the agenda."

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