With Ogden still fresh in the mind, the risk of under-insurance on Liability covers is the latest quandary on the horizon for Insurance Brokers, as many existing claims may be settled at figures that far exceed the current policy limits in place. Any claim that is settled now, and in the future, will use the current Ogden rate and not the one that applied at the time an incident occurred; this could leave policy holders having to fund any potential shortfall.
This brings forward the question when with our client of the policy limits on Public Liability – but perhaps more importantly, Employer’s Liability – and whether the limits of cover should be increased.
Special consideration should be given as to whether the standard Employer’s Liability limit of £10m remains adequate for a client. When undertaking a review with a client, perhaps a more important discussion point than the size of the company, is the age of its work force, as those with younger workers and apprentices may need significantly higher limits of indemnity than those with a more mature workforce. If these younger workers have accidents which result in life changing injuries, then claims costs could far exceed the Limit of Indemnity in place, when calculated using the new Ogden discount rate.
In addition, failure to undertake this review with your client could be a breach of your duty to a client (with potential Professional Indemnity implications), so always review and document these discussions, and remember if you are not having these conversations with client, you can guarantee your competition will be!!