UKTC Archive

Re: Time to think - INSURANCE

Subject: Re: Time to think - INSURANCE
From: Jim Quaife
Date: Dec 30 2003 11:41:12
Dear Ray,
Welcome aboard.
The Employers' Liability insurance issue in the UK  is driven in the first
instance by it being a statutory requirement.  The combination of the claims
culture leading to outrageous sums of money being awarded, together with the
insurance companies not doing anything about a situation that has been
looming for some ten years, has led to a sudden wake-up call.
In the 1980s, when insurance was "doing well", many companies extended their
writing into areas that hitherto they would not have touched with a barge
pole. They made money, but as the temperature cooled they began to bale out.
Many high risk (we are limiting the problem to EL insurance here)
occupations began to develop a claims history with a progressively worsening
claim ratio.  The ratios for UK Arboriculture and Forestry is remarkably
similar at about 500%.  From an insurance point of view these two
professions are lumped together.  (Bear in mind that the UK government
regards any enterprise with an annual turnover of less than £10million as
being a "small business".  In effect this makes all Arb/Forestry businesses
"small" and in national bean-counting terms, nothing to make much of a fuss
We are in  the position where there are only two insurers offering EL cover.
One company, NIG, is not accepting new risks, and the other AXA has been
persuaded (mostly by David Hewitt of Algarve Insurance Brokers Ltd.) to
extend the deadline at which they were to withdraw cover completely.
Arboriculture has got its act together and has begun to put in place a
self-regulatory system to demonstrate to AXA (and NIG) that successful
applicants are properly set up in terms of employee risk management.
Whilst this is essential, we cannot expect any reduction in premiums, or
indeed any reduction of increases in premiums, until the statistics start to
We can do nothing about the level of claims (certainly not in the short
term) so the only target we have is to reduce the number of claims.  This
has to be actual.
The Forestry side does have various extant benchmarks of risk management,
but these are not especially geared to satisfying the insurers.  For the
Foresters' part, they will have to work towards unification so that a single
standard is presented.
The contractual arrangements that you describe Ray, are pertinent, but one
cannot ascribe a legal responsibility to someone else.  The discussion
revolves around the exact employment status of sub-contractors and the
various levels of input and contactual responsibility they may have.
My point is that anyone in the position of employing sub-contractors who
have their own EL insurance, should not assume that their responsibilities
as employers are thus negated.
Jim Q

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