The Market

Risk Management - Impacts on Insurance Premiums

A poor claims record will affect the amount you pay in insurance premiums. Insurance premiums can be increased or cover may actually be refused.

Example of a poor record

An insurance company became seriously concerned over a foundry (metal workers) with a bad safety record. A health and safety survey of the foundry showed:

• High levels of noise not appreciated by the company.
• Wearing of hearing protection not being enforced.
• No noise control measures in place, other than hit and miss use of hearing protection.
• The foundry had been prosecuted for health and safety breaches.
• Health and safety documents were sparse and disorganised.
• Employees had developed a claims culture.
• Managers appeared to have lost control of health and safety management.

The insurer considered withdrawing cover but, after meeting the board of directors, cover was continued subject to:

• A 100% increase in employers' liability premium from £100,000 to £200,000.
• Mandatory involvement of the insurer's health and safety team.
• The foundry paying for two days health and safety consultancy per month.
• A situation review after 12 months.

Example of a good record

A number of small businesses in the North West took part in a health and safety campaign. Working with independent health and safety advisors, they were able to reduce their insurance premiums. One construction Company premium decreased from £12,000 to £6,000.

May 2007