No-fault system is the way forward, says Ireland

The insurance industry must take a more progressive attitude to the employers' liability (EL) crisis and embrace change, outgoing chairman David Ireland said today.

In his opening address, Ireland said the current EL system was "irreparably damaged", "in terminal decline" and that another "patch-up repair" was not viable. He said there needed to be a no-fault workers' compensation scheme coupled with a greater focus on risk management issues.

"Workers' compensation is a success in the vast majority of states in the US and it is from here that we should take our lead. We are in a position where we can use hindsight to tailor a system that combines the best of the successful schemes and omits the flaws.

"We cannot keep pumping money into a tort-based system, where the compensation paid to the injured party is often only a small part of the cost of the overall claim.

"Insurers are voting with their feet and the numbers willing to write EL are very few. Five major insurers account for 70% of the market. What happens if one or more of these calls it a day?"

Ireland, who hands over to Nick Chown tomorrow, also said the conference should urge further use of the risk management standard.

"Over the past year Airmic has pursued every opportunity to be true to its mission. At Birmingham we had the launch of Professor Frank Furedi's report Refusing to be terrorised, jointly sponsored by Lloyd's and Airmic.

"We have also seen the issue of the joint Airmic, Alarm and IRM risk management standard. The interest this is generating is very gratifying. This conference provides further opportunities to develop this interest and, hopefully, will be a spur to many to put the standard into practice."