Insurers Flouting Pledge On Employer Liability Notice Periods

11.35.00am BST (GMT +0100) Thu 20th May 2004

Major insurers are flouting their pledge to provide businesses with adequate notice when renewing employers' liability insurance cover. The insurance industry had promised a three-week period of notification, to allow businesses to look around for competitive quotes, but this period has now shrunk back to a week in some cases.

The Liberal Democrats are now calling for Ministers to consider tougher action against insurers, following research by the Federation of Small Businesses (FSB), which reveals that 30% of businesses received notice of one week or less when trying to renew their cover.

Commenting on the research, which is due to be published in full next week, Brian Cotter MP, Liberal Democrat Small Business Spokesman, said: "Small businesses struggling to cope with steep premium increases will feel rightly aggrieved that many insurers are failing to honour their word and give sufficient notice when renewing cover.

"Promises from both Ministers and insurers to tackle the insurance crisis are starting to ring hollow in the ears of small employers, who continue to face soaring premiums.

"Ministers must get a grip on this situation, once and for all, before more small businesses go to the wall as a result of premium hikes.

"If insurers cannot stick to adequate notice periods on a voluntary basis, then the Government must consider protecting the viability of small businesses by introducing fixed notice periods on a statutory basis."

ENDS

Notes

• Following dramatic increases in the cost of Employers' Liability Compulsory Insurance (ELCI) the insurance industry signed up to a new code of conduct, pledging to give at least three weeks' notice to businesses whose cover for the compulsory workplace insurance was about to expire.

• The Federation of Small Businesses is due to publish a survey next week which shows that 30% of small businesses received notice of one week of less when renewing their cover for Employer's Liability Compulsory Insurance (ELCI). More than half of respondents were given only two weeks' notice.