Quakes and Floods

Quakes & Floods to Affect Premiums

Recent months have seen a spate of natural disasters with the insurance market, Lloyds of London, being heavily involved in the aftermath. Lloyds estimates that its insurance market faces claims totalling $3.8 Billion (£2.33 Billion):

                                         Estimated Claims

Incident                                              Lloyds of London                   Estimated Claims                                                                                                           Insurance Industry Globally
                                                                    
Japanese Earthquake & Tsunami     $1.95 Billion  (£1.2 Billion)              $30 Billion
New Zealand Earthquake               $1.2 Billion (£750 Million)               $9 Billion
Australian Flooding                       $650 Million (£400 Million)              $5 Billion

Richard Ward, the Chief Executive of Lloyds of London, said “The beginning of 2011 has seen a major impact on communities in Australia, New Zealand and Japan. As ever, our priority remains to assess and settle valid claims as swiftly as we can to help these communities get back on their feet.”
“The Lloyd’s market is as well capitalised as it has ever been and, while claims from all three events could still evolve over time, the market’s total exposure is well within the worst-case scenarios.” He added: “We expect to see a firming of rates as a result of this first quarter and the recent tornadoes in the United States”.

When insurers underwrite a book of business they make a judgement as to how much of the risk they can take themselves. They then off-set the remainder of the risk by taking out re-insurance from re-insurers such as Munich Re and Swiss Re.  (Without Reinsurance, the major “high street” insurers would not be able to insure as many risks as they do at present with a corresponding increase in premium rates, more stringent policy terms and a shortage of insurance availability). With regard to the Earthquake and Tsunami in Japan, most of the losses will be met by Japanese insurers. Only 40% of these losses have been reinsured by the Japanese insurers  which means that they will be footing the bill for 60% of the insurance claims while the remaining 40% will ultimately be met by reinsurers.   Major reinsurers, such as Swiss Re and Munich Re took the lions share of the reinsurance risk from Japan. As a result Munich Re has suffered a $2.1Billion hit from the Japanese earthquake, which is reportedly larger than the company’s entire natural disaster budget, and Swiss Re has estimated claims at $1.2 Billion.     
Since the beginning of this year, global bill for natural catastrophe losses have topped $50 Billion. This, combined with the continuing low return on investments will inevitably create an upward pressure on insurance rates generally.

Major insurers such as Hiscox and Munich Re (the World’s largest re-insurer) have warned of large price increases as early as this Summer, with Hiscox predicting rises of 10% in the US catastrophe market. 
The after effects off the recent natural disasters are still being felt in the global financial markets and will be visiting a premium near you in the not too distant future. Take a look at your insurance arrangements in good time before your renewal date and consult an insurance broker to review the market so that you can be sure you have the most appropriate cover and the best deal available from the market. 

If you would like to discuss any of the features covered in this article then please call me, David Wilson, on 07970 304169 or email me on david@nevillejones.com
David Wilson - The Business Insurance Expert.
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by giving right advice, at the right time, providing peace of mind.

Employer Reference Number

Employer reference number

Why do I now need these when taking out Employers Liability Insurance and where can I find it?

What is an Employer Reference Number?

An ERN is given to every business that registers with HM Revenue and Customs as an employer. It is a unique set of letters and numbers used by the taxman and others to identify your firm. It is often referred to on tax forms as an employer PAYE reference.

This reference is made up of two parts: a three-digit HMRC office number, and a reference number unique to your business. It will be provided to you in your employer’s welcome pack when you register with HM Revenue and Customs, and will also appear on a range of correspondence from HRMC.

Employers registered with HM Revenue and Customs will receive a range of details and reference numbers. Many of these can be confusing, and some get lost. But the employer reference number (ERN), also known as an employer PAYE reference, is a vital piece of information that you must hold onto.
 
When do I need an ERN?

Your ERN will be required in a number of different circumstances. Perhaps most importantly, you will need this number when you come to complete your end-of-year PAYE return. An invalid or missing ERN is amongst the most common reasons for the rejection of end-of-year returns; you will need to know this number in order to fulfil your statutory reporting obligations.

It is also likely that you will be asked for your ERN by an employee at some point. Employees often need their employer’s reference number when applying for tax credits, applying for Student Loans, and a range of other tasks. You may also be required to include it on payslips.

As a result of impending legislative changes, you will also now need to declare your ERN when purchasing Employers Liability Insurance. This is required to identify at which firms an employee has worked in the event of a claim significantly after the event – for example in the case of claims for asbestosis. 

The Employers’ Liability Tracing Office (ELTO) is an independent industry body comprising members who are Employers Liability (EL) insurers.
 
The ELTO is an independent industry body comprising members who are Employers Liability (EL) insurers. It is a proactive move by the insurance industry to meet its obligations to help those who have suffered injury or disease in the workplace identify the relevant insurer quickly and efficiently. At the heart of this process is a centralised database – the Employers’ Liability Database (ELD) – which will contain all new and renewed EL insurance policies, old EL policies that have new claims made against them and all successful traces from the current Tracing Service. ELTO’s members will be required to supply policy data to the ELD on all new and renewed EL policies from 1 April 2011. The ELD will be accessible for claimant searches from this data via www.elto.org.uk and will be used to trace EL policies.

Why is there a requirement for the ERN (Employer PAYE reference)?

The ELD’s ability to provide enquirers with successful trace results will be supported by establishing a unique identifier for each employer on the database. ELTO has adopted the Employer Reference Number (ERN) as the most effective unique identifier available. This is also commonly referred to as ‘Employer PAYE Reference’. Members will be required to supply the ERN to the ELD.

On the Motor Insurance Database (MID), the vehicle registration number is the unique identifier that enables searches to identify the appropriate data record. The ERN will perform a similar function on ELD.

Do all companies have an ERN (Employer PAYE reference), if not who is exempt?

UK businesses employing one or more people are required to have the ERN, which is the reference number for their employees’ income tax and national insurance contributions. A tiny minority of employers do not have an ERN.

The only exemption is where the employer pays all their employees below the PAYE threshold (£503.00 monthly).

What are the timescales for getting the ERN (Employer PAYE reference) loaded onto the database?

From April 2012, ELTO members will be required to supply all subsidiary names as well as the Employer Reference Number (ERN) for the policyholder and all subsidiaries for all new and renewed policies. In preparation for this, members will begin to collect this information from April 2011.

Will brokers be able to use ELTO to trace policies for their insurers?

The purpose of ELTO is to provide claimants with information to help them trace an EL insurer. However, as with the current tracing service, brokers will also be able to use the service where their insurer is facing a specific claim and they need to identify their former insurer.

What if I have lost my ERN?

It is important that you keep hold of you ERN, as you will need it regularly throughout the tax year. If you have lost the number, you will be able to find it on correspondence from HMRC relating to PAYE. It will also appear on any P45s or P60s for previous or current employees of which you have copies.

If you do not have any record of your ERN it may be that you are not registered as an employer. If this is the case, but you are employing or intend to employ someone, it is vital that you register as a matter of urgency.

If you would like any further advice regarding your Employers Reference Number or indeed any aspect of your liability or business insurance requirements, for a free review contact David Wilson on 01244 520844 or 07970 304169.    (Email: david@nevillejones.com)