Businesses hit by insurance crisis
The rising cost of liability insurance has prompted worried calls for change as the commercial insurance crisis reaches levels which could prove unsustainable for businesses.
Link: Government rejects business insurance demands
The British Insurance Brokers Association and the Association of British Insurers are to draw up new guidelines forcing insurers to give businesses adequate notice before raising their employers’ liability premiums.
Currently businesses are being forced to accept grossly inflated insurance prices and short notice premium hikes because, by law, they must insure their employees against accidents and illnesses in the workplace. And as insurers are not required to give their customers long-term warnings of rising premiums, they increase required payments at the last minute, making sure clients cannot shop around for better rates.
The guidelines come as the Confederation of British Industry called for ‘urgent action,’ telling the government, in a review of business insurance, that hundreds of businesses have already collapsed because they are unable to pay their liability insurance.
Digby Jones, director general of the CBI said: ‘The rise in insurance premiums is happening at the worst possible moment for many in business. Small firms and ‘high hazard industries face particular difficulties over the cost and availability of cover.’
He is asking chancellor Gordon Brown to cut the cost of insurance for businesses by handing back some of the £300m tax windfall in the Budget.