FSB jobs warning over insurance premiums

The Federation of Small Businesses (FSB) has warned that up to a 1,000 local jobs could be lost if high insurance premiums are not reduced.

At the launch of the FSB's report in the Stormont Assembly today, it was revealed that of the 375 businesses surveyed (each averaging 15 employees), 17% said they would close unless the situation is resolved.

Wilfred Mitchell, Policy Chairman, said that high insurance costs were threatening growth and ultimately jobs.

“We cannot emphasis enough the seriousness of this situation and in particular would urge that all assembly members, councillors and members of parliament address this issue, which affects many thousands of small businesses throughout their constituencies," he said.

“The disastrous implication is that as many as 1,000 jobs are under threat as employers no longer can sustain the crippling effects of increased insurance premiums."

According to the research, the average premium in 2001 was £10,312. In 2002, this had increased to £16,345 – an increase of 57.5%. The report found that manufacturing was the hardest hit sector, with many respondents fearing that increased insurance costs would be the final blow for many operating within this sector.

Mr Mitchell also claimed that, as business insurance is becoming less accessible to smaller concerns, many businesses operating in the construction sector are doing so without adequate cover. The implication of this, said Mr Mitchell, were that "honest businesses with proper insurance cover cannot compete for contracts".

Doubly worrying, say the FSB, was the way in which the extra cost of insurance accounts for losses that cannot be passed on to the customer – and so business is "forced into closing down".

The research also indicated that global variables, outside of the control of businesses in Northern Ireland, had caused increases as well as a reduced level of competitiveness due to insurance companies moving out of the region or refusing to offer cover to businesses. According to the FSB, in 1994 there were 26 insurance underwriters, currently there are five major companies.

Sean Fox, FSB Insurance spokesperson, said: “We are delighted that the Office of Fair Trading has launched an enquiry into the Liability Insurance market in the UK. We want our local politicians to put pressure on the UK Treasury to utilise the Insurance Premium Tax to provide a ‘pool’ of employers’ liability insurance backed by government. However, it is a little too late for many businesses."

(GMcG)