Firms give muted response to Department for Work and Pensions report into spiralling insurance premiums
The construction industry has given a lukewarm response to a government report into the employer's liability insurance market. Firms said the study, by the Department for Work and Pensions, offered no immediate solutions to the crisis caused by rising premiums.

Published on Wednesday, the report says the market for employer's liability insurance will continue to be difficult. It predicts that premiums will continue to rise for the foreseeable future.

The report cites evidence from the National Federation of Roofing Contractors, which estimated that the average premium increases for its members during 2001/2 was 161%.

The bleak outlook for the insurance market means that pressures on business is likely continue for the foreseeable future, although the report maintains that, to some extent, firms have adapted to the higher premiums.

It says: "Companies have more chance to plan ahead and they appear in a better position to get the advice they need and to shop around."

The National Federation of Builders said immediate action was necessary to help firms.

Barry Stephens, the NFB's chief executive, said the report confirmed the federation's views about weaknesses in the current system.

It will take time for government measures to have any impact on premiums.

Barry Stephens, NFB

He said: "There is clearly a long-term need for reform, but it will still take time for planned government measures to have any discernable impact on premium costs – and the problem is getting worse by the day."

He added that the NFB had been prompted to develop its own insurance scheme.

Stephen Ratcliffe, chief executive of the Construction Confederation, said his organisation had lobbied "long and hard" for government action to tackle the crisis in the employer's liability market.

He said: "We must now ensure that words are swiftly turned into action and hope that it is not too late for the many businesses suffering severe hardship."

He added that, in the meantime, companies desperately need access to affordable cover.

The report contains a government pledge to work with the insurance industry to encourage improved standards.