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LONDON-Life as Britons and risk managers know it may soon change if a new party comes to power after the general election May 1.
The two major parties generally agree on issues of importance to business and insurers. In addition, several pieces of legislation important to business already have been passed by Parliament and so are not at risk of being held up by politics.
Even so, there are still several issues on risk managers' and insurers' wish lists for whichever party wins the election.
U.K. Prime Minister John Major last week called a general election to be held May 1. Under U.K. law, the prime minister may call an election at any time but must do so by the fifth anniversary of the last election, which in this case was May 1992. At stake are 651 seats in the House of Commons. During the last election, Mr. Major's Conservative Party won the majority, allowing him to "form" a government.
Since then, however, the prime minister's majority has been lost due to a number of deaths and subsequent elections to replace those vacant Member of Parliament seats.
There are two other major parties in the House of Commons: the Labour Party, led by Tony Blair, and the Liberal Democratic Party, led by Paddy Ashdown.
Many Britons are disenchanted with Mr. Major and the Conservative Party, which has been in power for 18 years. The Labour Party currently leads the polls by more than 20 percentage points, leading to wide speculation that Tony Blair will be the next prime minister.
At first glance, the outcome of the election may not make much difference to risk managers. Most business executives support Mr. Blair's "new" Labour Party, which has moved from the left to the middle ground in recent years.
But observers wonder privately whether the La-bour Party will revert to its former ways if it comes to power.
Traditionally, the Labour Party has been the political party to increase taxes and to strengthen trade unions' grip on industry.
Labour also supports the Social Chapter of the Maastricht Treaty,which governs employee rights such as a minimum wage in the European Union. Mr. Major's Conservative party opted out of the Social Chapter and left the United Kingdom the only E.U. nation not to implement it.
Both the Labour and Conservative parties have stated that they will review Lloyd's of London's self-regulation under Lloyd's Act 1982.
In anticipation of such a review, Lloyd's own regulatory review will be completed by the middle of this year, said a spokesman last week. It is likely that Lloyd's eventually will be regulated externally, he said.
"Lloyd's has managed to survive with all governments of just about any color (for the past 311 years) in power, so we will work together with whoever forms a government," said the spokesman.
In addition, several pieces of legislation important to risk managers recently have passed Parliament, which means they will be unaffected by the elections.
For example, the Policyholders Protection bill became law last week after it received Royal Assent. The bill, which is now known as the Policyholders Protection Act 1997, enacts amendments that are designed to prevent North American professionals from recovering 90% of their claims from a U.K. guaranty fund if their U.K.-based insurers become insolvent (BI, March 10).
The act was signed by Queen Elizabeth II last Wednesday, according to a spokesman for the Assn. of British Insurers.
Regardless of who wins the election, risk managers and insurers will continue to press their legislative concerns.
The Assn. of Insurance & Risk Managers has several issues on its agenda, according to Executive Director Ina Barker.
In particular, she said AIRMIC is concerned about:
Deregulation. The government for the past 18 months has had a deregulation task force chaired by Deputy Prime Minister Michael Heseltine charged with reducing various compliance burdens imposed by regulations that have been issued by Parliament and the European Union. These include health and safety regulations.
AIRMIC hopes that under the next government the task force would continue to make sure that industry is "not overencumbered by regulation," said Ms. Barker.
The association would like to see "regulation that is less complicated and less costly for compliance," she said. "If there is a new government (under Mr. Blair), we support the view that there shouldn't be overregulation, although regulation should achieve results."
The Insurance Premium Tax. The IPT for non-life insurance products was first introduced in 1994 and is scheduled to be increased in April to 4% of premiums from the current level of 2.5%.
AIRMIC lobbied against the increase, said Ms. Barker. The association would be "very much against" another increase as a way for a new government to increase revenue through indirect taxes.
The Assn. of British Insurers would like to take that a step further: it would like to see the insurance premium tax abolished altogether.
"IPT is a poor vehicle to raise tax revenue as it is a regressive tax on the prudent" who buy insurance, stated a recent ABI Parliamentary newsletter. "Penalizing those who insure by increasing the rate*.*.*.*is likely to discourage individuals and businesses from taking out adequate insurance."
The Conservative party, which introduced the tax, continues to support it. It is an example of the party shifting taxes from income-based levies to spending taxes, said a Conservative party spokesman last week.
A spokeswoman for Labour party Member of Parliament Dawn Primarolo's office, who is dealing with IPT for the party, said last week, "we cannot say at this stage whether we would abolish it."
The Labour party will not outline its tax policy during the election campaign, she said.
Employee health and compensation. The Law Commission, which recommends legal reforms, published a consultation paper last year that suggested the government try to recoup state-funded medical costs from negligent parties. The commission estimated that up to (British pounds) 100 million ($159.3 million) in National Health Service costs could be recovered from those responsible for injuries (BI, Dec. 23/30).
AIRMIC is not in favor of this proposal because, among other things, it would increase employers liability insurance costs, said Ms. Barker.
Regardless of which party gets into office, "there should be a whole review of employee compensation so that genuinely injured parties receive compensation but the cost is not burdensome to employers," she said.
Meanwhile, in addition to the IPT, the ABI also has several issues it would like the next government to address, said an ABI spokesman.
He said these issues include:
Simplification of government rules relating to pension funds.
Adoption of laws allowing employees belonging to an employer-provided pension fund to have a personal pension account as well.
Exploration by the government, with the insurance industry's participation, of "the continuing changes in the boundaries between state welfare provision and insurance products."
Following the call for a general election, none of the parties divulged much information on specific positions or platforms. However, general positions are known.
For example, there are certain changes that Labour MP Mike O'Brien, as spokesman for the party on financial services issues, has suggested. In particular, the Labour party would introduce legislation that would enable financial services contracts, including insurance policies, to deal with the European Union's proposed single currency, "the euro."
The Conservatives have yet to agree on whether the United Kingdom should be a party to the single currency.
The Labour party also proposes merging the financial services watchdog, the Securities Investment Board, with the three "self-regulatory organizations" that govern the pensions, investments, and financial advice industries. If Lloyd's were to be regulated externally, it could report to the SIB.
Meanwhile, some legislation has been passed recently which will not be affected by the election.
Last week Parliament passed the Social Security (Recovery of Benefits) law. It enables the Compensation Recovery Unit of the Department of Social Security to recover the total amount of government benefits, excluding actual medical costs, given to an injured worker if that injured worker has received compensation from an insurer.ok as rewritten?
The ABI is concerned that the this law will increase the cost of insurance as more cases are litigated. The government has called on insurers to monitor the reformed plan to see whether problems arise.
The Civil Procedure law was enacted several weeks ago. This is enabling legislation which would allow a radically rehauled civil justice system for England and Wales as proposed by Lord Justice Woolf's committee (BI, March 3).
"In principle, we agree with the Woolf report because there would be quicker access to justice," said AIRMIC's Ms. Barker.