Employers' liability insurance pricing systems in Malta : an evaluation of the need for change

Abstract

Purpose: The main purpose of this study is to assess whether it is necessary to change the current rating structure of employers' liability insurance. This could be done by determining the current rating structure that is used by Maltese insurers and comparing it to that used by United Kingdom (UK) insurers. Changes in the current rating structure will be proposed, if necessary, in order to refine the pricing of such product. Design: The aims of the study were attained through the use of a questionnaire which was distributed to the five main local insurers. Furthermore, interviews based on the information gathered from the questionnaire, were conducted with these insurance companies. Findings: The study reveals that presently insurers are only using the traditional factors in their pricing systems, mainly wageroll per classification and type of business which does not normally reflect the risk being insured. Other rating factors were identified that should be taken into consideration for the calculation of the premiums of such insurance. Conclusion: The suggestions made by the researcher where: the introduction of new rating factors together with reduction in the cost of claims; improvement in the availability of information; the carrying out of research on long-tail diseases and also an increase in pressure to impose minimum liability amounts.