Britain’s manufacturers have called for a renewed drive to address deficiencies in the system of Employers Liability Insurance (ELI), despite a survey published today which shows that the galloping increases in recent years have eased.
The survey of 804 companies showed that 62% of respondents enjoyed a decrease in premium or no increase in the last year. This compares favourably with last year’s survey which showed 91% of companies had seen an increase. However, recent signs have indicated that the market has begun to harden again.
However, these figures mask a number of issues of concern:
- Wild swings in the level of premiums remain, with a maximum reported increase and decrease of 273% and 73% respectively.
- Whilst, large firms are tending to benefit from reductions in premiums, small and medium size firms are bearing the brunt of the increases.
- Despite a commitment from the insurance sector that premiums should reflect risk exposure and assessment, 73% of companies with an externally verified safety management system believed this did not result in a more favourable premium.
EEF believes that fundamental weaknesses remain in the current system which results in added cost by focusing on compensation, rather than rehabilitation which would help people back to work and achieve their full earning potential. In addition, there appears to have been little if any progress on government initiatives aimed at encouraging rehabilitation or reducing the cost of settling claims, with a pilot scheme to address this stalling because of failure to reach agreement with the trade unions.
In particular, EEF believes that steps need to be taken now to:
- Reduce the cost of settling claims which remains high, in the order of 40% to 60% of the damages received by the claimant according to the survey.
- Consult on the need for a long-tail disease funding arrangement. (1)
- Introduce policies which will make rehabilitation and getting people back to work a priority instead of compensation. The DWP should lead by delivering effective rehabilitation for its own workforce for example.
Commenting on the findings, EEF Director of Health, Safety & Environment, Gary Booton, said:
“Despite the improvement in the level of premiums there remains a strong case for root and branch reform of the current arrangements. A system which has financial compensation rather than rehabilitation and return to work as its focus is not one serving the best interests of society. In particular, whilst government has produced a number of documents supporting the concept of rehabilitation, it has failed to grasp the nettle and show leadership in this area.”
1. A long tail pool fund would sit alongside the insurance market and be funded by contributions from employers. This would address the difficulty of assessing the liability level of long term occupational ill health claims, arising from medical conditions as yet unknown.
2. The EEF 2005 survey of Employers Liability Insurance costs surveyed 804 companies in June 2005
3. EEF has led a campaign with the insurance industry to address the issue of rising ELI claims and helped pilot a model to reduce the cost of settling claims.
4. EEF, the manufacturers' organisation, has a membership of over 6,000 manufacturing, engineering and technology-based businesses and represents the interests of manufacturing at all levels of government. Comprising 11 regional Associations, the Engineering Construction Industries Association (ECIA) and UK Steel, EEF is one of the UK's leading providers of business services in employment relations and employment law, health, safety and environment, manufacturing performance, and education and skills.