The Office for Fair Trading has launched an investigation into employer's liability insurance.
The inquiry is the result of concerns over large rises in premiums, reported reductions in underwriting capacity and increases in excesses required by insurers. The OFT will assess whether the market is working effectively.

The study follows talks about market developments with the Association of British Insurers and government departments.

The OFT aims to publish a report next spring, though a further report could be commissioned in the light of the findings. The Association of British Insurers said the OFT should look at the impact of "compensation culture".

The decision to hold an inquiry comes as construction minister Brian Wilson this week blamed the industry's poor health and safety record for the increases in insurance premiums.

Part of the problem is the industry鈥檚 poor safety record

Brian Wilson, construction minister

Wilson, speaking at a National Specialist Contractors Council lunch on Monday, said: "I cannot avoid saying that part of the problem [of high insurance premiums] comes back to the industry's poor health and safety record."

He said that he knew it was galling for safe contractors to be tarred with the same brush as unsafe contractors but that did happen. Wilson urged the industry to contribute to the Department for Works and Pensions review.