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AXA urges the nation’s small businesses to avoid insurance scares

5th November 2014 Print

AXA Business Insurance warns that many small businesses could be sleep-walking into prosecution and financial difficulties simply because of oversights when arranging their insurance.

The insurer’s research also suggests that their exposure to compensation claims is higher than previously thought.

AXA’s ongoing research focuses on the UK’s 4.7 million small businesses – defined as sole traders and those with fewer than nine employees (excluding medium-sized and bigger businesses). In its independent survey, the insurer found that 53 per cent of the UK’s small businesses who employ staff do not have employers’ liability cover or are unaware of the cover, thus running the risk of prosecution or having to shoulder workplace injury claims on their own.

Businesses are more exposed to claims from employees than they think

A big question for AXA when conducting the research was just how many employers could potentially face a claim. When the insurer asked 2,000 members of the public whether they felt their work had impacted their health, most said it had. When asked about symptoms:

62 per cent of UK workers say they have suffered eye strain after using a computer at work – most (53 per cent) describe the symptoms as ‘severe’, while almost a third (28 per cent) say they’ve had pain or ringing in the ears in a noisy workplace;

36 per cent have been hurt by heavy lifting at work, while 62 per cent have suffered muscular aches and pains after long hours at a desk;

53 per cent of workers say they have had sleepless nights due to work stress (17 per cent said the disruption was severe);

16 per cent have been assaulted at work, five per cent saying the incident was serious.

Not all pains and strains at work turn into a compensation claim, but AXA’s findings do indicate that the scope for claims is high and ripe for exploitation by the UK’s army of no-win no-fee lawyers.

So, what about compensation claims from the public?

AXA also asked small business owners about their risk of facing compensation claims from non-employees – that is, members of the public who come into contact with their business. Altogether, 43 per cent of businesses that have visitors or work on other people’s properties do not have public liability insurance.

Once again, AXA found that businesses are more exposed to such claims than they might think. A survey of the general public found that almost half of the population – 48 per cent – have suffered property damage at the hands of a tradesman or other visiting business. At the most extreme end of the scale, 1 in 20 of respondents (six per cent) actually felt that they and their families had been put in physical danger by work done on their property.

Highest compensation claims against small businesses

The average workplace injury pay-out on behalf of a small business by AXA in 2013 was £14,300; while the average public liability settlement hovered around the £13,500 mark. However, last year, AXA also settled a number of claims that ran into several millions of pounds each on behalf of its small business customers.

Darrell Sansom, Managing Director at AXA Business Insurance, concludes: “We definitely are out to give small business owners a bit of a scare with these figures. It’s an important message: people trust in their insurance and they need to know where the gaps in their cover are. I would urge all businesses to check their policies right now and, if necessary, quiz their insurers on just what they are and aren’t covered for.

If businesses look at nothing else, they really must understand the importance of employers’ liability cover. Not only are there serious legal consequences if you don’t have it, workplace injury claims can reach eye-watering figures. We’ve had employers’ liability claims that run into the millions of pounds for the most serious injuries – a bill like that simply cannot be shouldered by a small firm.

A serious injury or illness is a tragedy for the employee, made even worse if they have to pursue an uninsured employer through the courts for compensation. It also means bankruptcy on top of prosecution for the employer if they don’t have the insurance to pay for the consequences”.