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Employers and Public Liability Insurance

In our news item of October 2002 we alerted readers to the considerable increases being imposed by insurance companies on businesses with a perceived high level of risk. We made a number of procedural suggestions.

Since then, whilst there have been meetings between various trade organisations and the government, no solutions of any substance have emerged. It is now being suggested that last years leap in premiums in the range of between 50%-2000% was not a one off. Businesses now face yet another round of increases with estimates for the coming year of 30%-100% - and in a tough economic environment!

However there is evidence that businesses can mitigate these increases if they can show their insurance company that they are actively managing their risks and that they comply with all the relevant health and safety standards.

In essence companies need to prepare a risk management plan with the assistance of an accredited broker and submit it to the insurance company so that they can assess more accurately the true level of risk of the enterprise. The plan will need to follow a systematic business analysis of risk.

Firstly check that the existing insurer will respond to a risk management plan, if not get the broker to find ones that will

• Get a breakdown of the insurance costs and which correctly identifies the higher areas of risk

• Prepare a 3 years claim history, identifying costs and claims

• Focus the plan activity in the high cost areas of the insurance and if necessary remove the higher risk items

• Demonstrate that the business complies with safety standards and obtain the appropriate certification

• Demonstrate that work is properly supervised and put in place a detailed staff safety programme

• Make arrangements for all equipment to be independently checked for safety

Put in place a monitoring action plan.

The plan will need to cover all aspects of risk/safety/fire/fraud and so on. The cost of insurance is still likely to be costly, but a well argued and professionally produced plan should ensure a premium reduction.

Accountants and business advisers are encouraged to support and lead their clients in managing this problem - it will build client loyalty, differentiate them from their competitors and add value to their client relationships.

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