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Association Rising premiums
Page 12
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spell bankruptcy
• by Kicky Taylor Small to medium-sized hauliers face bankruptcy this year as insurance premiums soar even higher, warns the Confederation for British Industry.
Employers' Liability insurance premiums rose on average 50% last year, while claims have increased 100% over the last five years.
Jane Smiles, director of waste and recycling operator Alex Smiles is expecting a further 50-100% increase in premiums this year. Last year, the cost of its cover rose to 190,000, a huge hike on the £12,000 the company paid in 2001.
"Insurances are such a relevant cost that we need to have knowledge of the premiums before our annual reviews on charge rates for skips. Last year, the increases meant a severe hit on our anticipated profits relative to our business plan," says Smiles.
Matthew Fell, head of enterprise at the C81, says the potential for firms to fail is real. "In
small firms with a tight margin, when you get a swing in your cost base this dramatic, it can wipe out profits," says Fell. The rise in insurance premiums is the biggest single factor in a firm failing, he says.
Haulage has been hit hard with rising premiums because it is regarded as a high-risk arena. "It's becoming increasingly difficult for hauliers to get cover. If people can't get insurance, then they can come to us," says Davis Group managing director Kevin Hancock.
The CBI says a more litigious society is partly to blame for the problem. It adds that the insurance industry has had to raise premium prices to cover a dramatic rise in costs, paying out £1.30 for every pound of premium income in 2001. Longterm reforms need to relate premiums to health and safety performance, it adds.
The OFT and Department of Work and Pensions are currently undertaking separate investigations into the insurance industry and claims that premiums are rising too fast.