Sharply rising insurance costs cast a long shadow over residential homes

Hundreds more children’s care homes could be threatened with
closure as the cost of insurance premiums for employer liability
continues to rise, the National Association of Independent
Resources for Children conference was told.

The warning follows news that the number of insurers prepared to
underwrite care homes against incidents in the workplace has fallen
dramatically. This, combined with a rise in claims and sums
awarded, has seen care home premiums rise by up to 700 per
cent.

Liberal Democrat social care spokesperson Paul Burstow told the
conference last week that the lack of consistency in premiums was
forcing some providers out of the market.

“There is a shortage of coverage. The number of syndicates at
Lloyd’s underwriting this insurance has gone down from 12 to three
in the past year.

“Owners are being told just a few days before their policy expires
that premiums are going up or that the insurer is no longer going
to insure in this type of business area,” he said.

Burstow said the market was “letting down” too many providers and
called for an individual home’s premiums to be calculated on their
own claims record and ability to manage risk rather than looking at
the sector as a whole, as is currently the case.

“We should be saying this is not the way to be working this. It
should reflect your business’s ability to manage risk and, if you
do well, you should pay less.”

He also criticised the Health and Safety Executive for reducing its
“proactive” role in checking providers had insurance cover.

“It has reduced by a third the number of inspections it carries
out, but at the same time dramatically increased the number of
investigations it does,” he said.

He called for the HSE to change its practice and, in areas of
greatest need, to cap insurance costs.

Last July, Nairc held an emergency meeting after being inundated
with calls from homes which had been refused insurance. The
association later secured a deal with the Macclesfield-based
insurance broker Bollington Group (news, page 12, 8 August 2002).