Written Answers. - Insurance Costs.
Thomas P. Broughan
Question:
33
Mr. Broughan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
the plans, if any, she has in relation to reducing the cost of public liability and employers' liability insurance for small and micro businesses; and her views on the importance of doing this to curb the black economy.
[24220/98]
The Deloitte & Touche report on an economic evaluation of insurance costs in Ireland found that smaller companies, in general, pay higher premiums for liability insurance cover. Insurers calculate liability premium rates on the basis of their underwriting experience of business firms and the level of risk represented by different classes of business. In that regard, small firms are perceived by insurers as lacking sophisticated safety management procedures and as representing a higher risk class than larger firms. Smaller firms are therefore charged higher premium rates for employers liability and public liability cover.
To address this insurance cost problem for small companies and its contributory causes, the Deloitte & Touche report recommended that small businesses should join affinity groups to strengthen their collective bargaining power with insurers and that they should seek to improve their risk management procedures through greater awareness of and compliance with health and safety standards. A number of special affinity schemes have already been successfully established by, among others, the Small Firms Association of IBEC, the Construction Industry Federation and by publican, restaurateur and farmer groups. A new affinity scheme for the services and self-employed sector of ISME was launched in 1997.
In addition to affinity schemes for purchasing insurance cover, I recently launched a voluntary code of practice aimed at reducing the cost burden, including insurance costs, of injuries in the workplace which has been developed by a workplace safety group representative of, among others, IBEC, ICTU, the Health and Safety Authority and the insurance division of my Department. The object of the safe working and accident prevention code is to seek to ensure that injuries, where they occur in the workplace, are dealt with in the best way possible by management and that the employee is given every assistance and encouragement to return to work.
Voluntary participation in the code of practice commits the employers to: make safety an integral part of their business operations and make accident prevention a top priority; develop a safety culture through a partnership approach and with employee involvement; consult with employees and safety representatives on health and safety arrangements; provide, either through internal or external advice, requisite competence and appropriate health and safety training for all levels of employees, both on the job training and general health and safety training. Where appropriate, have information on hazardous substances, including material safety data sheet; provide a safety statement and ensure implementation though communication with all staff.
For their part the participating employees undertake to: exercise care for their safety and that of others through their actions and safe work practices; participate in safety measures including safety training; use their initiative and take a responsible approach to accident prevention in their workplace; support the safety policy and familiarise themselves with the company safety statement and the arrangements, information and procedures therein; and co-operate with safety arrangements. The common objective for employer and employee is to address health and safety matters in a non-adversarial climate of consultation and partnership.
As the representative association for employers liability insurers in Ireland, the Irish Insurance Federation has indicated its full support for the voluntary code of practice. It particularly supports the co-operative approach proposed which recognises the shared responsibilities of employers and employees. The adoption of the code of practice is seen by the Irish Insurance Federation as a very positive step in building a safety culture in the workplace and it envisages that compliance with the provisions of the code on accident prevention, accident investigation and treatment of occupational injuries will help to reduce the frequency of accidents in the workplace. This, in turn, will help to control the costs, including insurance costs, associated with accidents at work with resulting benefits to employers in the calculation of liability premium rates.
I regard the initiatives on the establishment of affinity schemes for small businesses and the development of a voluntary code of practice in safe working and accident prevention as significant and positive measures being taken by Irish business, through a social partnership approach, to reduce the cost burden of accidents in the workplace and the related cost of liability insurance cover. With regard to the black economy impact, the high cost of employers liability premiums for small firms is not necessarily an incentive to engage in the black economy as employers liability insurance is not compulsory. The major benefit of reducing the cost burden, including insurance costs, on small businesses of accidents in the workplace will be to reduce overall labour costs and thus make it economically efficient for employers to increase employment levels.
