The gap is widening between companies' potential liability and levels of insurance protection in Europe. Companies bought lower limits of cover for general and product liability last year and in early 2003 because of higher insurance prices and pressures on their revenues, despite a continuing rise in awards.
Exceptions to this overall trend are larger companies with revenues exceeding e10bn. These increased liability cover limits by 7%.
These findings from a new study by Marsh Inc are based on insurance buying decisions made during the 12 months ending 31 January 2003. "Limits of liability Europe 2003" concludes that European firms surveyed bought 11% less on average (from e55m to e49m), while average costs rose 82% from e8,339 per e1m of coverage to e15,196.
Small and medium sized firms pay the highest proportion of their revenue for their liability insurance, although comparative costs reduce as the amount of coverage rises. Overall, Scandinavian companies paid the least at e0.41 per e1,000 revenue and firms in the Central and Western region (including Germany, France and Netherlands) paid the most at e0.55. This reflects a tendency of firms in that region to buy wider cover.
