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dd If you are in the haulage business, the chances are that
Page 62
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you will have experienced substantial increases in your liability insurance premiums. You may have seen significant increases that have stretched your funds.
Even as an established business with a claim-free track record, there is no doubt that many firms can no longer afford to purchase employers liability insurance.
Remember, this is a compulsory form of cover,just like motor insurance and as a result some companies are being faced with the decision of ceasing to trade or breaking the law. Indeed, AXA insurance has recently estimated that there are currently as many as 16,000 companies of all types, not just hauliers, operating without cover.
So, what is being done? A professional insurance broker can improve the chances of your company receiving a competitive quotation by offering key risk management advice and cover options. But unfortunately this will not benefit everyone.
However, make sure that you have the basics in place to protect you and your business. Start by asking yourself these questions: Do you have an employee handbook and contract of employment with recognised grievance procedures? Do you have a Health and Safety handbook?
Do you provide employee benefits to assist if someone is unable to work through accident or illness? Do you train your employees in respect of their work and ensure that they are kept up to date with changing conditions and new contracts? Do you undertake and record risk assessments?
We know how tedious some of these procedures can be but they encourage underwriters to see that you are doing things differently, making you a more attractive business to insure than one with none of these documents.
In November last year, the Chancellor of the Exchequer announced that the government would be undertaking a 'formal review' of employers liability insurance. The aim of this is to assess the effect of changing from the current litigation system to one of compensation awards. It will also look into the feasibility of creating an 'industrial disease pool' to fund occupational illness.
But you might say: "These don't affect our industry. We're not vulnerable to industrial diseases." Well, what about the effects of DVT or the unknown long-term impact of regular use of mobile phones? Don't those affect the haulage industry as much as any other?
Meanwhile, liability-related studies are also being carried out by the DTI and the Office of Fair Trading and, while these reviews reflect the nationwide concern about employers liability premiums, an end to compulsory insurance is undoubtedly a long way off. Meanwhile, litigation is increasing in other areas, making additional insurance purchases an essential consideration for all businesses.
For example, directors-and-officers liability insurance protects the individual assets of a director or manager. It provides legal defence costs for claims made for wrongful, or alleged wrongful, acts. And, in the past year, insurance companies have seen huge increases in the number of claims being made, particularly in the areas of Employment Practice and regulatory matters such as Health & Safety.
Without any doubt, the compensation culture seen in the general liability market, and promoted by 'no-win-no-fee' companies, is contributing to the spiralling number of claims being made against individual directors.
In fact, just in the past 12 months, there has been a 25% increase in applications to the Employment Tribunal for cases such as unfair dismissal and sexual harassment.
Employers liability insurance has not been profitable for underwriters for many years. They are in business to make money, as you are. Unfortunately, premiums are rising and this is why you need to be able to demonstrate that you are doing your bit to manage the risk within your business.