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Graylings Bill will fail to deliver lower premiums

4 June 2014

The Social Action, Responsibilities and Heroism Bill, announced in the Queens Speech, will have little impact on insurance premiums according to insurance law firm Browne Jacobson.

Justice Secretary Chris Graylings Bill (known as SARAH) is proposing greater protection for responsible employers who face unmeritorious claims from employees as well as others such as rescuers and those acting for the public good, who are often deterred from carrying out good deeds or organising local community events for fear of facing claims for negligence.

The Ministry of Justice cites street parties being cancelled due to requirements for £5m of public liability insurance due to concerns over negligence claims, and householders fearful of clearing snow in case of a claim as examples.

It believes the Bill will permit insurers to reduce premiums following a fall in the number of unmeritorious claims as it urges judges to show greater leniency in such cases that end up in court.

However James Arrowsmith, partner at insurance law firm Browne Jacobson feels the Bill lacks the necessary substance to have a significant and lasting impact:

"Whilst the announcement suggests a populist measure, there is little indication yet that the Bill will contain much of substance.

"Unless the changes are more substantive than currently suggested, the impact on premiums is likely to be slight. Other reforms already in place have far greater potential to bring premiums down.

"Since October employees have been limited to pursuing their claims in negligence, which requires them to prove a foreseeable risk.

"Steps to deter unmeritorious claims by rebalancing financial risks have already been taken and reforms to health and safety law will effectively remove strict liability for employers.

"Reducing demand for public liability insurance on the other hand is likely to be counterproductive. If risk is not widely spread, then premiums for those organisations and individuals who do wish to have the protection of insurance will increase."

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Lakhbir Rakar

Lakhbir Rakar

PR Manager