Insurers which reduce public liability premiums to maintain market share risk winding back the benefits of tort reform, according to Vero Insurance risk management chief Paul Muir.

Vero says competitors may be returning to times of premium cost-cutting and quoting risks at below the technical rate in order to win or retain market share. Mr Muir, Vero’s Head of Portfolio and Risk Management, says insurers need to take a longer-term view of pricing rather than a cyclical approach.

“A longer-term view benefits the customer while helping them with consistent pricing, service and therefore value,” he said. “It is not sustainable for insurers to continue to engage in cost-cutting then inflating rates when adverse liability events occur.”

Mr Muir says public liability premiums have fallen to the lowest level in more than a decade, but the reduction in claims payouts does not justify the level of rate cuts occurring.

Emerging risks are also something insurers should be aware of. He says there is a need to find a pricing balance between the effects of tort reform and emerging risks. “Insurers should focus on providing a fair pricing approach for the customer that is sustainable in the longer term.”