Insurance: Soaring Costs Or No Cover

Insurance premiums are becoming an increasing topic for concern for many businesses. T&A looks at the problem and tries to uncover the reasons why premiums are rising and some companies are having problems finding cover. Insurance is one of those business costs which we all hate but equally almost all agree are a necessity.

No reasonable businessman would argue that he didn’t need insurance. Firstly there is Public Liability, which, contrary to common wisdom, is not a legal liability, nor is Product Liability for anyone making or repairing a product. Then there is Employer’s Liability Insurance, which is a legal requirement, and we haven’t even started on premises, stock, vehicles or more targeted niche policies.

The big problem for everyone is that insurance premiums are climbing. There have been warnings of 100 per cent this year, and as much as 400 per cent increase over the next two years.A UK truck tyre retreader who called T&A in a complete state of shock was having to completely reconsider his business strategy and advised us of several competitors who were taking the only option open to them and shutting up shop.

His premium for Premises and Business Income Insurance in December 2000 stood at £9,000, by the following year it had doubled to £18,000. This was bad enough, but December 2002 saw the premium rise to an incredible £60,000 with a £50,000 excess. At the same time his Employer’s Liability Insurance climbed from £9,000, through £20,000 to £42,000.

He reckoned that his insurance premiums had risen by 700 per cent in two years. Worse still, this business had never made a single claim ..