All general insurers currently or previously underwriting UK Employers’ Liability (EL) (or handling claims currently) (“relevant firms”) are required to publish an Employers’ Liability Register (ELR).

Relevant firms are also required to submit a regulatory return to the FCA which comprises a director’s certificate and accompanying independent audit report. Often a firm’s Statutory Auditors undertake the work on behalf of their clients although suitably qualified third-party auditors can also undertake the work, with considerable cost savings expected to accrue.

JCBFL can offer ELR audit services, through a partnering arrangement, at highly competitive rates.

Employers' Liability Audits

The directors of companies with EL liabilities are responsible for the design, implementation and maintenance of control procedures that provide an adequate level of control to meet the relevant rules of the Financial Conduct Authority (“FCA”) including those in Insurance: Conduct of Business Sourcebook (ICOBs) 8.4 and SUP 16.23A. These responsibilities are:

  • produce the Company’s employers’ liability register (“ELR”) for all policies entered into, renewed or for which claims are made from 1 April 2011, complying with the requirements in ICOBS 8.4.4 R(1)(a) and subject to ICOBS TP 1, as at 31 March 2019,
  • obtain and submit to the FCA a written statement, by a director of the company responsible for the production of the ELR confirming that to the best of the director’s knowledge that in its production of the register the firm is either: i. Materially compliant with the rules set out in ICOBS 8.4.4R(2) and ICOBS 8 Annex 1; or ii. Not materially compliant with the provisions referred to in (i), in which case the statement must also set out, to the best of the director’s knowledge, the information required by SUP 16.23A.5R(3),
  • obtain and submit to the FCA a report satisfying the requirements of SUP 16.23A.6 R, prepared by an auditor satisfying the requirements of SUP 3.4 and SUP 3.8.5 R to 3.8.6 R, and addressed to the directors of the firm.

The FCA has defined material compliance as being at least 99% of policies, required to be reflected on the ELR, being fully accurate and faithfully reproducing underlying information, to ensure a successful claimant search.

ELR auditors are required by SUP 16.23A.6 R (2) to carry out our work having regard in particular to the following possible risks:

  • information relating to certain policies issued or renewed on or after 1 April 2011 is entirely omitted from the register even though some relevant policy details are included in the firm’s underlying records,
  • information relating to certain policies in respect of which claims were made on or after 1 April 2011 is entirely omitted from the register even though some relevant policy details are included in the firm’s underlying records,
  • relevant information required to be included in the register, and which is included in the firm’s underlying records, is omitted from, or is inaccurately entered on to, the register,
  • information relating to policies which do not provide employers’ liability insurance are included in the register.

Our services

  • review of the reconciliation process undertaken by a company between its ELR and underlying records,
  • evaluation of the design and implementation of the key processes and controls for preparing the ELR,
  • use of Computer Assisted Audit Techniques (CAATs) to identify differences between policy data in the ELR and Company’s underlying records,
  • performance of integrity testing of data within the ELR,
  • ELR audit reports prepared on a limited assurance basis, with a statement as to whether the firm is materially compliant with the ICOBS Handbook requirements.