Government ignores insurance problems

by Glenda Thisdell

A call for the government to underwrite the industry's insurance requirements is likely to go unheeded.

Despite cries for help from an increasing number of firms facing ruin because of sky-high premiums, the government insists it is not its problem.

A Treasury spokesman told CJ: "We are aware that some companies are experiencing difficulty and we are monitoring the situation closely. The government does not generally interfere with insurance matters."

He added: "We have stepped in recently with airlines because there was a clear case of market failure, but that is not the case with employer liability cover at the moment."

Last week the National Federation of Builders (NFB) begged the government "to throw the industry a lifeline by offering to underwrite part of its insurance requirements" and warned that "hundreds of firms are going to the wall".

One member company, Rushar in Gwent, found cover only at the 11th hour. It paid £60,000, up 275% on last year's payment of £16,000.

"Many firms won't be able to afford these kind of increases," said NFB chief executive Tony Maynard.

An Association of British Insurers spokeswoman said a large part of the problem stems from the rising number and level of personal injury awards. "The insurers must quote a price that reflects risk. In the past 10 years, the employer liability market paid out more in claims than it received in premiums."

The NFB suggests contractors review their insurance cover at least two months ahead of renewal dates.