UK Employers’ Liability Insurance: Market Dynamics and Opportunities 2016

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The UK employers’ liability insurance market continues to be characterized by overcapacity and unprofitability. While underlying demand for employers’ liability has steadily increased in recent years, premium rates continue to lag behind claims inflation. In the wake of the uncertainties created by the Brexit vote and the government’s personal injury reforms, the market could be in for a turbulent few years.


• UK employers’ liability market gross written premium grew by 1% in 2015, hampered by tough underwriting conditions in a competitive market. Premium rates are currently reported to be largely flat to slightly negative across the UK as a whole.

• Employers’ liability remains unprofitable; the sector has not made an underwriting profit since 2005. The market continues to be propped up by reserve releases, which are showing no signs of slowing down.

• The level of claims inflation has reduced due to the success of LASPO and fixed recoverable costs. However, this is likely to be temporary, and inflation for catastrophic losses remains above 10%.

• The number of accident and disease employers’ liability claims recorded fell significantly in 2015–16 (-16.3%) due to a reduction in the impact of the LASPO spike, the start of a decline in noise-induced hearing loss (NIHL) claims, and continued improvements in workplace health and safety.

• However, disease claims settled are yet to show any signs of falling (+29.1% in 2015–16), reflecting the greater length of time it takes to settle disease claims and the time lag before insurers will feel the impact of any reduction in NIHL claims recorded.

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Table of Contents


EL market conditions remain tough and the sector faces a turbulent few years

Key findings

Critical success factors


Underlying demand for EL continued to rise, particularly in service industries

The number of businesses and employees continued to grow in 2015

SMEs account for over 52% of private sector employees

Increasing demand is occurring at the small and large ends of the company size spectrum

The UK economy has continued to shift from manufacturing to services

High levels of competition continue to dampen growth in the EL market

The UK EL market grew slightly in 2015

Premium rates are flat or slightly negative

The underlying macroeconomic environment remained positive but uneven

The top 10 EL insurers increased their market share in 2015

Lloyd's is gaining market share as it increases binder and line slip business

EL remains unprofitable and continues to be propped up by reserve releases

EL has not made an underwriting profit since 2005

EL loss ratios continue to be plagued by claims inflation that outpaces premium rate rises

The number of EL claims recorded is falling

Claims numbers have fallen in both sectors of EL

NIHL continues to take its toll

NIHL drove a spike in disease claims, which peaked in 2013-14

NIHL claims started to wane in 2015-16

Claims settled are still sharply rising, and recorded claims remain significantly above pre-LASPO levels

The number of asbestosis and mesothelioma cases are largely stable

Accident claims numbers have fallen below pre-LASPO levels

Accident claims have dropped significantly since 2011-12

Injuries to employees, the underlying driver of EL accident claims, are in long-term decline

The Claims Portal is having limited success, particularly for disease claims, leading to calls for reform

Only 20% of disease claims are estimated to meet portal criteria

4% of disease claims and 12% of accident claims notified have been settled within the portal


EL GWP is forecast to remain largely flat until 2018

There is little evidence of any near-term shift in premium rates

A significant capacity or investment shock would be required to shift rates

EL GWP is expected to decline slightly in 2017

Underwriting profitability will remain challenging

The negative economic consequences of Brexit will have an adverse effect on EL

The EL product, levels of competition, and health and safety legislation are likely to be unaffected by Brexit

The economic consequences of Brexit will have the greatest impact

The Mesothelioma (Amendment) Bill could place a further levy on EL insurers

Psychological and chronic back pain claims have yet to have any real impact

Government personal injury reforms could have a seismic impact on EL

Government proposals would increase the small claims track limit and remove general damages for minor soft tissue injuries

There is extreme uncertainty over the future passage and scope of the reforms

Impacts of the reforms: wide-ranging with potential for unintended consequences

The increase in the small claims track limit could affect up to 20% of EL claims

Wherever reform lines are drawn, repercussions will be felt in EL


Abbreviations and acronyms


Claims Portal









Primary and secondary research


Further reading

About Verdict Financial



Table 1: UK employment rate, number of employees, and number of private sector businesses with at least one employee, 2011-16

Table 2: Number of employees and number of businesses in the UK private sector split by number of employees, 2011-15

Table 3: Number of businesses and growth in the UK private sector, by industry sector, 2011-15

Table 4: Number of employees and growth in the UK private sector, by industry sector, 2011-15

Table 5: UK employers' and total liability GWP, 2011-15

Table 6: UK GDP preliminary estimates, Q2 2015-Q1 2016

Table 7: Top 10 UK EL insurers' market shares, 2014-15

Table 8: Lloyd's UK EL GWP through Changing, 2011-15

Table 9: UK EL underwriting result and underwriting ratios, 2011-14

Table 10: Number of EL claims recorded and settled, split by accident and disease, 2012-16

Table 11: Employer-reported fatal and non-fatal injuries to employees, 2010-15p

Table 12: UK EL market GWP, 2011-20f


Figure 1: UK employment has grown steadily between 2011 and 2016

Figure 2: Small and large companies are growing the fastest in terms of number of employees

Figure 3: Service industries show the fastest growth in employees and number of businesses

Figure 4: EL GWP grew by just 1% in 2015

Figure 5: GDP growth was driven by services in 2015

Figure 6: Lloyd's has grown its UK EL market share since 2011

Figure 7: The UK EL market remains unprofitable

Figure 8: The rise and fall of disease claims recorded has dominated the EL sector

Figure 9: While EL disease claims recorded fell in 2015-16, claims settled continue to rise sharply

Figure 10: EL accident claims are significantly below pre-LASPO levels

Figure 11: Injuries to employees are in long-term decline

Figure 12: Forecasts for the UK economy have been significantly downgraded since the EU referendum

Figure 13: A stagnant market until 2018 will affect UK EL GWP growth

Figure 14: Potential impacts of Brexit on the UK EL market

Figure 15: Potential impact of government reforms

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