Making the Market Work is the latest ABI initiative to improve the operation of the EL insurance market, in the face of rising costs for insurers, and higher premiums faced by many businesses. Between 1996 and 2002 claims costs have risen threefold. The initiative has been developed by the ABI following consultations with trade associations.
Under the initiative:
* Trade associations or other similar bodies can submit details of their health and safety schemes to an ABI Joint Standing Committee for assessment against best practice features that insurers expect to see in place. These features have been drawn up by the ABI, in conjunction with several trade groups. The Committee comprises of senior underwriters from the leading EL insurers.
* The Committee will report back to the trade association with a specific assessment of their scheme, together with any suggested improvements. There is no ‘pass’ or ‘fail’.
* Once completed, details of the assessment will be sent by the ABI to all ABI members writing EL insurance. Insurers will take into account this information when assessing the risk from firms who belong to the particular trade association or body’s health and safety scheme.
John Parker, the ABI’s Head of General Insurance, said:
" This initiative is good news for businesses and insurers. It highlights the ABI’s determination to ensure that the employers liability market works as efficiently as possible, and that good health and safety practice in business is properly recognised.
Everyone will benefit through a better flow of information. Businesses will understand the health and safety practices insurers are looking for, while insurers will be able to reflect good health and safety in the terms they can offer. Hopefully, we will also see rising standards of health and safety across the small business sector. "
The Government has welcomed the initiative. Des Browne, Minister For Work, said:
" Coming on the back of a new code of practice on renewal periods, this is another positive initiative by the industry. Like renewal periods, more risk based underwriting was a key area identified in the recent Government review. It also links well to current work being undertaken by the HSE on better risk profiling. "
The British Printing Industries Federation is the first trade association to submit its health and safety scheme for assessment. Dale Wallis, their National Health, Safety and Environmental Adviser said:
" We eagerly welcome the opportunity to translate good practice in health and safety into real savings for our members, whilst improving the health and safety performance of the industry as a whole. Over 250 companies are using our Health and Safety Healthcheck on an ongoing basis. We expect this to grow to 600 during 2003.
"We are delighted that the insurance industry recognises the lowered risk of quantified good practice, and is prepared to pass that on to its business customers. The significant rise in premiums affects many businesses, and the ABI should be congratulated in trying to mitigate the impact by financially rewarding best practice. "
Making the Market Work is the latest in a series of ABI initiatives to improve how the EL market works. These include:
* Recently launched industry service standards, which set a 21-day minimum notice period for renewal terms.
* Research currently being carried out into alternative methods of funding long – tail occupational disease claims. These claims make up a quarter of EL claims.
* A study into how rising legal costs can be curtailed. Legal costs account for 40% of claim costs.
* Further research to set out the business case for rehabilitation. Timely and effective rehabilitation programmes can aid an injured persons speedy recovery, and reduce claim costs.
John Parker renewed the ABI’s call for a fundamental reform of workplace compensation, stressing:
" Insurance industry initiatives, while important, cannot alone relieve the intense pressure which rising costs are placing on EL insurers and their customers. Only fundamental reform will ensure greater certainty on future claims costs, reduce legal costs and help moderate premium levels for businesses. The ABI will continue to be at the forefront of the argument for change. "
