“Mummy, what is insurance?”

Liability Insurance through the eyes of a 9-year-old.

A good question from my 9-year-old daughter trying to understand what I do for a living. And to avoid going to bed. Even a lesson in commercial liability insurance is better than dealing with the monotony of the bedtime routine apparently.

How do you answer that question in a succinct and stimulating way? It’s hard enough to excite and explain to a bunch of brokers at BIBA or Cii accredited clients and coverholders at an MGAA conference. But how do you make the complexities of compliance and the nuances of underwriting risk sound fascinating to a curious 9-year-old that you are desperate to impress!

How about using the Wikipedia definition?

Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the “insured”) from the risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy.

Bit heavy going maybe.

So how about Tara Foley’s explanation,“Insurance is the democratisation of risk – there’s nothing more purposeful than that.”

Bit showy-offy perhaps.

Plus, I didn’t think bedtime was the appropriate moment to quote the CEO of AXA UK & Ireland. So, this is how my lesson went…

Me: Liability Insurance helps protect people and businesses when things go wrong.

Daughter: So, a bit like a policeman or a superhero?

Me: (desperate to ‘yes’ to get some mum kudos!) Not quite. Insurance companies pay out money if something bad happens so that the company doesn’t go out of business. And it helps people if they get ill or injured at work.

Daughter: like a nurse?

This career advice was going badly.

Daughter: Can I get some insurance, so I don’t have to go to school?

Me: No, you can’t. Night night.

Daughter: Why not?  Lots of bad things happened at school today. Alice fell over and cut her knee playing tig. Well Joe pushed her, but nobody believed her. And I lost my favourite rubber. I need money to buy a new rubber.

Me: I’ll buy you one. You don’t need insurance.

Daughter: So, what’s the point if the insurance won’t get me a new rubber or Alice a plaster for her knee?

It’s a fair point. Maybe one to explain during tomorrow’s bedtime ritual.

Daughter: Do I have to do insurance when I’m older like you?

Me: No sweetheart. You can do whatever you want to do.

Daughter: Good. I’m still going to be an actress or a singer then. Insurance sounds boring. And pointless if you can’t even get a new rubber.

And just like that my 25-year career in insurance is diminished to being boring and pointless.


*Stops there, knowing this isn’t the time or the place for a masterclass in liability insurance*

Leaving her bedroom downhearted to reflect on my career choice, as I kiss her goodnight, I’m thrown a lifeline.

Daughter: Mummy, does Taylor Swift get insurance?

Me: Yes, she does. Everybody needs insurance. It’s very important because it contributes to…

Daughter interrupting and suddenly interested: Does Irwell give it to her free because she’s famous?

This is my one chance to rescue my career choice credibility…

The future is looking brown

‘We’ll get shovels in the ground, cranes in the sky and build the next generation of Labour new towns’

Under their manifesto mantra to ‘get Britain building again’ the Labour government has big plans for the construction industry. But will Labour’s plan to build 1.5 million new homes and boost brownfield funding cause construction claims to come crashing down on the insurance market?

Recent Health and Safety Executive (HSE) and the Labour Force Survey (LFS) research reveals that UK construction worker fatalities are 70% higher than 5 years ago with 51 deaths and 53,000 non-fatal injuries. A further 69,000 construction workers suffered with work-related ill health. This trajectory must be addressed by the sector which is poised to be pushed to its limits to fulfil Labour’s ambitious new home building targets.

H&S issues contribute to 2.6 million working days lost annually which underpins the need for enhanced safety standards as more brown and green sites are set to be bought, bulldozed and built on.

John Cowell, our Senior Class Underwriter examines the risks associated with brownfield development and satisfying the relentless housing market demand.

A £68 million funding boost has been issued to 54 councils to transform disused and neglected brownfield sites including derelict buildings, former car parks and industrial sites into new homes. The government is also considering redesignating greenbelt if needed to fill the deep housing shortfall.

The concern for the insurance industry stems from the regulation of construction site H&S procedures, policies and conditions, post-build construction defects and new-build warranties. The pressure on liability insurers is further compounded by the skills deficit, labour shortage and omnipresent regulatory and environmental concerns.

More risk exposure, more insurance claims.

Environmental factors pose a significant risk to brownfield developments, particularly if the sites harbor unknown contamination or ground conditions. From metal corrosion and material degradation to crumbling and cracking concrete, structural and foundation failures are a major risk factor.

Brownfield land is often located on former industrial sites where drainage systems have been removed which means they can become prone to flood risks. Similarly, developments on or near a flood plain in rural and urban areas could also result in a surge in flood related claims.

The UK’s labour skills shortage is another major issue. A 2024 report published by the Construction Industry Training Board found that the UK construction industry needs to attract 50,300 extra workers per year to meet expected demand over the next five years.

The concern is that less skilled tradesmen plug this gap resulting in inefficient and unsafe working conditions and substandard buildings which can lead to more claims and invalidated builder warranties. But who pays the price of this below-par workmanship?

Insurers may bear the brunt of having to pay for repairs if defects and damage fall under new home warranty policies.

Changes in legislation are having a significant impact on the construction industry. The Defective Premises Act (DPA) 1972 aims to ensure that new builds or refurbishments meet specified standards, and it allows homeowners or tenants to claim compensation if a building is deemed unfit for habitation.

The Building Safety Act 2022 (BSA) significantly increased the period in which a claim can be brought against a builder from 7 to 15 years. This new limitation period has extended the volume and scope of liability claims across the entire construction sector.

Will the risks be worth the reward of creating communities, building better homes and helping people get on the property ladder? The proof will be in the 1.5 million homes.

Stat sources: https://www.constructionnews.co.uk/health-and-safety/construction-fatalities-70-worse-than-five-years-ago-04-07-2024/ https://protecting.co.uk/construction-health-and-safety-statistics/

Construction Health and Safety Statistics

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Our team of underwriters are committed to finding the right solution for your business. From employers’ and product liability to commercial legal expenses, we specialise in mitigating business risk.

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Budget day is looming. Are there scary times ahead?

Is there a subtle message hidden in the fact that that Labour is delivering its first budget in almost 15 years on the day before Halloween?

Prime Minster Keir Starmer has predicted of a ‘painful’ budget which will pull on the purse strings of many individuals and businesses to plug the “black hole” in the country’s finances, inherited from his predecessors.

What will be the impact on the working people of Britain, the rich and famous, businesses large and small and on the insurance sector?

Getting out of a big black hole

As well as ensuring the £22 billion black hole in public finances doesn’t get any deeper, the chancellor will be under pressure to boost economic growth, bolster housebuilding and address skills and staff shortages. These priorities will undoubtedly have knock-on implications for the insurance industry.

According to the Institute of Directors, the government could implement various labour market interventions that will help improve the number, availability and calibre of workers in the UK.

But behind every silver lining there is a cloud. According to the Health and Safety Executive (HSE), workers are as likely to have an accident in their first six months at work as during the whole of the rest of their working life. This raises the concern that we may experience a spike in employers’ liability claims.

Biba calls time on taxing times ahead

Insurance premium tax (IPT), a tax on the price of an insurance product which functions as an indirect tax on consumers and businesses is collected by insurers and then paid to HMRC. The current rate of 12% is a considerable financial burden on households and businesses.

BIBA believes that this is a tax on the poor and vulnerable – and on businesses at a time when they should be investing more in risk management, not hidden insurance costs, so that they can take considered risks to ensure business growth.

In its submission to the Treasury, Biba called for the new government to cut the rate of IPT from 12% to 10% and to implement exemptions such as cyber insurance products to increase take-up from SMEs.

Biba has also reiterated the need for government to commit to long-term investment in flood defences and other climate related impacts to reduce the adverse effects of flooding on people, businesses, communities and insurance premiums.

In the broker space, the threat of an increase in capital gains tax could lead to an exodus in small and medium sized brokers looking to retreat from the sector before changes force them out.

Have you got broad shoulders?

Starmer has even warned that things will have to get worse before they get better. He also hinted that the biggest burden would be borne by those with the ‘broadest shoulders.’

But who do these shoulders belong to that should be afraid of Chancellor Rachel Reeves and her Halloween Budget?

Not the ‘working people’ of Britain. The government pledged not to increase taxes for this demographic suggesting that Income Tax and National Insurance are expected to remain unchanged.

Similarly, SMEs should be reassured by Labour’s commitment to providing stability and certainty over taxation policies with predications that corporation tax will be capped at 25% for the duration of the current Government’s term in office.

Reeves is also expected to introduce a business roadmap outlining changes to corporation tax reliefs and capital allowances for the next five years. This will help business owners make more informed decisions about investing in staff, training, NPD, premises and equipment.

But large corporates, non-doms and high earners who are rich in profits, property, shares and assets beware.

Your broad shoulders are likely to be burdened with hikes in capital gains tax, inheritance and dividend tax changes plus the possible elimination of business assets disposal relief.

 If you have children at private school, the blow will be even harder.

Better protection for fire protection businesses

Working with our partners at Commercial Express and SP Insurance Services, Irwell provides specialist liability insurance for businesses involved in the installation and maintenance of sprinkler protection systems and contractors within the fire protection industry including:

• Active Fire Protection Contractors who detect and alert, stop or contain a fire. 

• Passive Fire Protection Contractors who prevent the spread of fire throughout a building. 

• Sprinkler and Fire Suppression Engineers that install and maintain fire suppression and sprinkler systems designed to detect and extinguish fires in the early stages and to prevent fire growth and spread.

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Helping to keep businesses fire-proof

Of the 22,000 workplace fires recorded every year on average, 25% are caused by faulty or misused electrical equipment.

But it’s not just buildings and people that are affected by fires in the workplace. The stress and financial implications for a business can also be profound.

According to UK Government figures, the average cost of a fire to businesses is around £78,000. That’s before preventative costs or damages incurred through punitive actions following the blaze are accounted for.

If there is a fire on your premises and you are found non-compliant with The Regulatory Reform Fire Safety Order 2005, there is no maximum legal recompense or compensatory damages cost, and you could even find yourself with a custodial sentence.

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Specialists in Legal Expenses Insurance

Running a business or managing commercial and residential properties can come with many unforeseen legal risks. From an employee dismissal or injury to tenant disputes, data breaches or property damage.
Legal disputes can arise when you least expect it – from a supplier or contractor, an ex-employee or tenant and even HMRC. Whatever the cause and however big or small the dispute, the costs involved in defending or pursuing legal issues can soon escalate.

With over 30 years’ experience, Irwell’s Legal Expenses cover provides the right protection to suit unique business needs.

Our legal expenses insurance policies also include access to a FREE LEGAL HELPLINE provided by our partners at Irwell Law.

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Specialists in Commercial Liability and Legal Expenses

Every organisation and every sector face unique business critical risks.

From SMEs and sole traders to larger corporates, we understand the associated risks and rewards of running these businesses. That’s why we are best placed to protect them. 

Liability, legal and health and safety experts at your service 

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Are your terms and conditions fit for work?

Labour promised to make work pay. They promised to overhaul the employment legislative landscape to get better pay and conditions for the UK’s 33.09 million employed workforce.

They meant business.

Many of their planned reforms hit the headlines. From banning unpaid internships and zero hours contracts to employees having the right to request flexible working arrangements from day one. The latest radical plan to introduce a 4-day working week for full time employees is also big news.

But what other reforms can we expect in the last quarter of 2024 that haven’t quite made the front pages?

Irwell’s Senior Class Underwriter in Legal Expenses, Billi Cobley summarises seven changes employers should be prepared for to avoid exposing themselves to the risks of costly, stressful and time-consuming tribunals.

1. Stable and predictable contracts

    Workers with unpredictable working hours, or a fixed-term contract of less than 12 months, will have a right to request a more stable and predictable contract after 26 weeks of service.

    2. Fire and re-hire

    A new statutory code of practice will set out a procedure for employers to follow when considering dismissals for employees who do not agree to changes to their terms and conditions.

    3. Harassment and bullying

    A duty requiring employers to proactively prevent sexual harassment by taking “reasonable steps” will be introduced.

    The Bullying and Respect at Work Bill proposes a statutory definition of bullying and will allow employees to bring a standalone claim in a tribunal.

    4. Pensions

    Under proposed pension auto-enrolment rules, the lower earnings threshold will be removed and those aged under 22 will be in scope of the scheme.

    5. Gender pay gap

    Regulatory exemptions from gender pay gap reporting will be extended to businesses with fewer than 500 employees.

    6. Paternity leave

    Legislation will be introduced to allow employees to take paternity leave within the first year after the birth and also split the leave into two blocks as long as they give 4 weeks’ notice of the dates when they wish to take the leave.

    7. Neonatal care leave

    Under the Neonatal Care (Leave and Pay) Act 2023, parents of babies who are admitted to hospital before 28 days old for at least one week will get a maximum of 12 weeks paid statutory leave in addition to their maternity or paternity leave.

    Tribunals on the rise

    In 2023/24, employment tribunal receipts and disposals increased by 7% and 16% year-on-year. Meanwhile, open cases increased by 3% to 653,000 over the same period.

    This rise in cases underscores the need for an appreciation of employment legislation, having preventative measures and HR policies in place – and legal expenses protection that can ease the burden should a legal issue arise.

    Source

    https://www.gov.uk/government/statistics/tribunals-statistics-quarterly-january-to-march-2024/tribunal-statistics-quarterly-january-to-march-2024