Liability insurance market follow-up review

23 June 2005

Lower increases in premiums, better communication between insurers and policyholders and a reduction in the number of businesses denied cover are among the key improvements identified by the OFT in its follow-up study of the UK liability insurance markets. 
 
The OFT found that the average premium rises in 2004, while still ahead of general inflation, had fallen to seven per cent for employer's liability, and four per cent for public liability and professional indemnity insurance. Further, significantly fewer businesses than identified by the previous study were being denied renewal of cover by their insurer or denied cover by other insurers.

In the case of employer's liability insurance, for example, the number of businesses denied cover fell by two thirds to three per cent. Those sectors which were identified in the 2003 report as experiencing significant problems in getting cover showed signs of improvement in both availability and lower than expected price increases this time around.

Insurers and policyholders should also be benefiting from initiatives, led by government departments and the industry itself, aimed at making the markets work better. Longer renewal notice periods and efforts to improve information and risk management, so that premiums more accurately reflect risk (for example, by taking better account of good health and safety practice), seem to be providing benefits for all concerned.

The follow-up study also included some initial work on after the event insurance. The OFT will contribute to the work which the Civil Justice Council, in conjunction with the Department for Constitutional Affairs, will be undertaking in this area later in the year.

Liability insurance is insurance against a legal liability which the insured may incur to third parties. It includes employer's liability, public and product liability and professional liability.

Download The UK liability insurance market - follow-up report (pdf file 400 kb).
Download Summary of business survey (pdf 696 kb).

See press release.

Background

In a study published in June 2003, the OFT identified a number of concerns in the UK liability insurance markets, and undertook to review the markets in order to assess whether further action was necessary.

See June 2003 report.
Announcement of follow-up study - see press release.

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