At a time when some insurers are reducing their primary limits, many businesses are demanding greater protection against larger liability claims. Even relatively minor incidents have the potential to exceed standard indemnity limits that could threaten their solvency and well-earned reputation.
Historically, it was extremely unlikely that a single claim could exceed £10m but businesses of all sizes, across all sectors, are now operating in a very different environment. As a result brokers should review their clients’ Public Liability and Employers Liability limits in order to help them prepare for, and address the unexpected.
Personal injury claims are increasing
Advances in medical science, longer life expectancies and increasing care costs are contributing to larger losses, often exceeding £10m standard indemnity limits. As an example, take the technological advancements in prosthetics which are moving beyond basic therapeutics to sophisticated daily assistance devices with multiple versions tailored for different activities and sports, (swimming, tennis, running, climbing, etc). As a result, prosthetics are becoming more expensive and therefore driving up potential claims payments following an incident.
The impact of the Ogden discount rate changes are still being felt today. The value of claims for catastrophic injury has increased significantly, especially those involving traumatic brain injury or spinal injury. Given the potential awards it only takes a serious incident for standard limits of indemnity to be exceeded.
Changing contractual demands
Local authorities, property owners or main contractors will often require their contractors to hold £10m+ indemnity limits before any work is started, making additional excess of loss cover a useful option for specific projects and contracts.
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