smallbusiness.co.uk: Helping your business think big

Rising insurance premiums are causing many small businesses to lay off staff to cover the costs of employers’ liability insurance, according to the Federation of Small Businesses (FSB).

A survey of 1,000 small business owners showed a fifth had laid off staff or stopped recruiting in response to spiralling insurance premiums. (See our recent article on insurance costs.)

20% of respondents are facing doubled premiums this year, on top of the severe increases seen in 2002. This has led to falling profits for over half those surveyed, while 15% have reduced staff training.

Even more worryingly, a quarter of small firms have found it difficult or impossible to find the compulsory employers’ liability insurance, while 8% are trading illegally without it.

FSB National Chairman John Emmins said, "Small firms are facing another round of huge premium increases that will force some out of business. The ongoing crisis is having an adverse impact on employment prospects and firms are reducing investment in crucial areas such as staff training. Faced with a crisis on this scale, the Government must provide immediate assistance and spur the sluggish insurance industry into action."

For more on the insurance crisis, visit www.fsb.co.uk.

Also, see our top tips for reducing your insurance costs and How to get the best insurance deal.

(16/7/03)

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