ELTO database may lead to increased employers liability insurance claims against businesses


Businesses can expect soaring employers liability payouts as a plan to encourage more claims is put together.

Any business that has full or part time staff has a legal requirement to hold employers liability insurance. These days increasing numbers of employees are claiming for work-related injury or illness, but because these conditions do not arise sometimes until years after they have left a job, tracking down the employer can cause problems.

Some employers would have stopped trading, merged with other firms or maybe now trade under a different name, so tracking down an insurance policy to make a claim

The answer lies in new proposals from the Financial Services Authority for a central database that registers the policies run by the Employers Liability Tracing Office (ELTO).

Consultation on the proposals has just closed; with key industry group the British Insurance Brokers Association (BIBA) coming out in support of the idea. BIBA represents 1700 regulated insurance brokers and intermediaries who distribute nearly two-thirds of all UK general insurance.

Peter Staddon, BIBA Head of Technical Services, said: “BIBA strongly believes the best result for consumer protection would be to have one single tracing office run by the insurance industry.”

BIBA expects insurance brokers to have to change their current practices in order to comply with the new requirements.

Depending on the final regulations, BIBA anticipates that insurance brokers will have to source their customer’s PAYE reference when arranging a policy – employees can then use their pay roll records to tie up any searches on the database.

“We believe that supplying the reference will create a system that makes it much easier and more successful when tracing Employers’ Liability Insurance (ELI) records, which is vitally important at a time when people are suffering from a disease,” said Mr Staddon.

The database will include all employer liability policies starting on or after November 1, 1999.

In the consultation response, BIBA also suggests an undefined ‘deterrent’ should be built in to the reporting process to make sure businesses do not flout the database registration rules.

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One Response to ELTO database may lead to increased employers liability insurance claims against businesses

  1. David Walton says:

    Insurance is there to protect the client. A database to trace the previous insurance history of a company is vital to prevent future problems. Not sure it will increase claims and if insurers charge the right premium in the first place, this should not cause a big problem. ELTO should prevent companies from going out of business from claims reported up to 40 years after the event. If a company has been purchased, it should be appreciated the purchaser takes the liabilities as well as the assets of a company! It is only really fair that if a claim arises, the insurers are easy to trace. After all, the cover is sold on the basis that it will cover the business for future claims.

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