Licensees face closure worries after rise in employers liability insurance costs

Small businesses could be forced to close because they cannot afford the large increase in employers liability insurance premiums, says the British Insurance Brokers' Association (BIBA).

The insurance is compulsory for all businesses under the Employer's Liability (Compulsory Insurance) Act 1972. Any employer must have insurance in place for a minimum amount of £2m to cover them in the event of any injury, death or disease that happens to any of his employees from situations arising at work. Employers also need to display a notice stating that the insurance is in place.

Some licensees have reported increased rates for their insurance of up to 1,500 per cent. This could lead to many licensees and small pub companies going out of business or continuing to trade without insurance, as they cannot afford the inflated premiums.

BIBA said: "There are thousands of small companies that either cannot obtain cover or cannot afford to pay the increased premiums, and will either close down or continue to trade illegally."

Paul Williams, head of business insurance at brokers Hill House Hammond Business, said that a large number of insurance companies were no longer willing to offer policies. This is due in part to the increase in the number of court cases taken out against employers in the licensed trade, which makes it expensive for the insurance companies to cover them.

He said: "Certain insurance companies are getting out of the market and the licensed trade is suffering. If you can't get employers liability you are out of business."

He advises licensees to use a commercial broker, examine the cover they need, carry out risk assessments, ensure they have adequate security and check health and safety procedures.

Licensee John Anderson of the Coach and Horses pub in Wallsend spoke out last month about the insurance increases faced by his pub. He has advised licensees to "shop around" for the best deal.