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Joy for sole traders as compulsory insurance law scrapped |
The self-employed are no longer required to take out employers' liability compulsory insurance. The change in the law takes effect today
THE self-employed are no longer required to take out employers' liability compulsory insurance (ELCI). The change in the law, which takes effect today, will be welcomed by about 300,000 UK businesses employing only their owner, as the cost of compulsory workplace insurance continues to soar.
Removing the requirement to purchase ELCI could save companies an average of £250 each year. A study by the British Chambers of Commerce found that almost three quarters of all firms (74 per cent) experienced an increase in the cost of their cover last year.
Before the law was changed, uninsured companies faced a fine of up to £2,500 per day.
Jane Kennedy, the Minister for Work, said: "Many small businesses whose owners have told us they cannot afford to buy this compulsory insurance will no longer need to purchase it." Many sole traders also viewed the requirement as superfluous, because it is impossible for a business owner who is the sole employee to sue itself.
David Frost, director-general of the British Chambers of Commerce, welcomed the change, but is concerned about the crippling effect that ELCI increases continue to have on the remaining small businesses.
He said: "This move will do little to benefit the majority of small companies, many of whom are still suffering from the rising costs of ELCI. A survey of 600 of our members last year showed that one third had experienced an increase of between 20 and 50 per cent in the cost of their premium in the past 12 months.
"The Government has recognised that ELCI increases are placing a heavy burden on firms. However, the Department of Health's proposal to recover NHS costs from insurers in personal injury cases will serve to push up the cost of premiums by over 5 per cent. This proposal, which is due to come into effect from April, should be abolished to prevent a bad situation from getting worse."
More Than, the insurer, welcomed the change, but warned business owners not to be complacent about the varying and seasonal insurance needs of their firm.
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