Doubled indemnity: the costs of employers' liability insurance are spiralling in the UK as 'compensation culture' takes hold in this country. Well over 200,000 British firms are breaking the law because they can't afford the requisite cover. Cathy Hayward reports on how the government, businesses and the insurance industry are tackling the problem.
| Author | Hayward, Cathy |
| Position | Insurance |
After knocking back cocktails in a Soho bar for five hours, a twentysomething female professional wearing three-inch heels falls down the stairs on her way out and pulls a tendon in her ankle. Will she get a cab home, bandage up her foot and nurse her hangover? Or will she call her lawyer and decide to sue the bar for negligence?
It's clear that the UK is following American culture and becoming increasingly litigious. A recent BBC2 documentary, Sue You, Sir!, depicted solicitors who had resorted to standing at the gates of primary schools and encouraging children who'd fallen over in the playground to sue their teachers for lack of supervision. The public is being bombarded with messages from "no win, no fee" lawyers, urging people who have had an accident in the past three years to sue the person at fault.
"It seems that, regardless of how stupid you've been, solicitors have a method for getting money for you," says David Williams, UK head of claims at insurance firm Axa.
This trend is continuing in the workplace: employees are suing their companies for accidents as simple as falling off a chair.
"Everyone recognises that, if someone has a serious accident at work and the employer is at fault, a claim should be made against the employer's liability insurance," says Michelle Haste, a solicitor specialising in employment law at Jones Day Gouldens. "But there are grey areas. If someone swinging on a chair falls off and injures themselves and requires thousands of pounds' worth of physiotherapy, is the employer at fault?"
More claims mean higher premiums, and employers are footing the bill. Employers' liability insurance (ELI) has risen by as much as 1,500 per cent over the past year for some companies, according to Patricia Hewitt, the secretary of state for trade and industry, although the average increase has been 50 per cent. Employers pay around 70 [pounds sterling] annually for each worker insured. ELI costs British firms almost 1.8 billion [pounds sterling] a year, of which 40 per cent goes on legal fees.
Many employers are having problems finding affordable cover. Almost 210,000 firms in the UK do not have ELI, so around 1.8 million employees aren't covered if they have an accident at work, according to a survey by Axa. As Williams says: "If society wants a litigious culture, then it will have to pay for it."
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