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PN 86/02 10 December 2002
The OFT has launched a fact-finding study into the UK liability insurance market (see note 1). The study will look at public, product, professional and employers' liability insurance.
A number of concerns have been raised over whether the market is working effectively - in particular about large increases in premiums, reported reductions in underwriting capacity and increases in excesses required by insurers. The study has been launched following initial work by the OFT including talks about market developments with the Association of British Insurers and Government departments.
The study will examine why premiums have recently increased. This research will also inform the current debate over how the market is working. The aims of the OFT study are to analyse current and past premiums, to understand why premiums have risen and see what lessons can be learnt from international experience.
The OFT aims to publish a report in spring 2003. Further work may be commissioned in the light of the findings.
2. The OFT study will be wider ranging than, and complementary to, the review planned by the Department for Work and Pensions of the employer's liability insurance scheme, which was announced in the Chancellor's Pre Budget Report. The OFT's terms of reference have been discussed with the DWP. The OFT will remain in contact with them and other key Government departments throughout the study.
3. The OFT has retained the services of Dr Christopher Parsons of the Cass Business School to undertake some of the detailed research.
4. In this press release the functions of the Director General of Fair Trading (DGFT) are for simplicity described as the functions of 'the OFT'. The Enterprise Act 2002 will replace the office of the DGFT with the OFT, to which will be transferred the DGFT's functions. The relevant provisions of the Enterprise Act are not yet in force.
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