At long last

[PhilWarman]

OFT to put ATE sector under the spotlight

A follow-up review of liability insurance markets was launched by the Office or Fair Trading today. The review will also look at the 'after the event' insurance sector.

In its June 2003 report on liability insurance, the OFT said that it would continue to keep the markets under review. In particular it would look again in late 2004 at: the level of premiums, including whether proposed initiatives to make the market work better had led to positive change; and at the issue of legal costs to see whether there was any further work which OFT needed to undertake.

In examining whether the markets are now working better than in 2003 the OFT said it will look to see: price developments, what current costs insurers are taking into account when pricing current policies, what impact initiatives adopted by insurers are having across the liability insurance markets. These include longer renewal periods and improvements to risk management so that premiums more accurately reflect risk, whether there are any business sectors which are finding it difficult to obtain cover.

The OFT will be contacting stakeholders for information on levels of premiums as well as seeking to obtain independent data on premium levels.

On the issue of legal costs, the OFT added that during the course of this follow-up review, it will carry out research into the ATE market, with a view to informing the debate on whether ATE premiums are contributing to the rise of liability insurance premiums. The OFT will be aiming to gain an understanding of the structure of this market, including how the product is sold to consumers, the level of premiums and how risks are assessed