The long-awaited change to Employer’s Liability rules

For most businesses in the United Kingdom, the purchase of Employer’s Liability (EL) insurance is mandatory.? EL insurance enables employers to compensate their employees in the event that they suffer an injury or illness in the course of their work.

As the employment landscape has evolved, we now change jobs more frequently than previous generations. Our list of former employers can read more like the end credits of a movie than an address book.? With respect to workplace illnesses which take time to develop (psychological injuries, for example, or adenocarcinoma may take years to manifest) this can create practical challenges when trying to track down former employers so as to file a claim.? I certainly don’t check that Mrs. Noseda, my first boss, still owns that bakery where I grew up (just checked, she doesn’t).

Recognising the need to for a streamlined process, the Employer’s Liability Tracing Office (ELTO) was established in 2011. ?ELTO is an independent body whose membership is comprised of EL insurers.? It was created specifically to help claimants who have suffered a workplace illness or injury to find the insurer providing EL cover to their employer when the injury was caused.

Since April 2011, ELTO has required its members to enter all new and renewing Employer’s Liability policy data into the central Employer’s Liability Database (ELD) as set out in ICOBS 8.4 of the Financial Conduct Authority (FCA) Handbook. This involves capturing and fully uploading detailed policy information, including the master policy number, policyholder and employer names, address details, policy numbers, coverage start and end dates, a list of subsidiary companies, and the Employer’s Reference Number (ERN) assigned by HMRC. This extensive data collection process and centralised database has created a resource for tracking down insurance policies efficiently, ensuring that individuals can identify the correct employer and insurer in the event of a claim.

While the ELD significantly enhanced the process of finding the correct insurers, it also introduced additional operational burdens for insurers.? In particular, the ERNs have proven difficult to obtain and even when captured are not always accurate. To address this, ELTO piloted a project in 2019 to improve the effectiveness of the ERN capture process. Working in collaboration with HMRC, ELTO’s pilot raised its success rate for member ERN data capture from approximately 50% to 75%, ultimately resulting in a more complete and reliable database for future claimants.

Following consultation between ELTO and the FCA in light of the improved ERN capture process, in 2024 it was decided that ICOBS 8.4 would be updated to reflect that ELTO would undertake the ERN collection on behalf of its member EL insurers going forward, using?‘best endeavours to obtain the ERN’?for its members. Member insurers are now only required to pass on ERNs to ELTO if they are received as part of the normal data capture process provided that

1. they have not been able to obtain the ERN solely due to failures by parties outside the insurer’s control; and
2. (2) the firm has used and continues to use its best endeavours to obtain the ERN.

·???????? ELTO (2024, May 9). ELTO welcomes change in the FCA's Employers’ Liability rules for ERNs: A milestone moment for the insurance industry: ELTO

·???????? FCA Handbook (2024). ICOBS 8.4: https://www.handbook.fca.org.uk/handbook/ICOBS/8/4.html and

ICOBS 8 Annex 1: https://www.handbook.fca.org.uk/handbook/ICOBS/8/Annex1.html

·???????? FCA (2023, September). Quarterly Consultation Paper CP23/18: https://www.fca.org.uk/publication/consultation/cp23-18.pdf