Premiums will soar unless a limit is imposed on the compensation paid to injured employees, warn companies Insurance companies want to cap compensation payouts to people who die or are injured at work. The insurers, under attack for their reluctance to provide coverage for Sars, say premiums would have to rise substantially unless the payouts are capped. They have yet to determine how much the maximum payout should be, however. The push to impose a cap comes as the medical sector struggles to arrange affordable coverage for health-care workers in the wake of Sars. But insurers want the cap to apply to all types of payouts under workers' compensation policies, which employers are required by law to purchase. At present, a worker can get a maximum $2 million payout without going to court. But a worker, or the family of a worker who has died, can seek unlimited compensation through civil action. 'This means the risk for the insurers is unlimited,' Hong Kong Federation of Insurers chairman Edward Lau Wan-kong said. 'The government may help to bring premiums down by putting a cap on the maximum payout the courts could order. The insurers would then be able to calculate the risk and charge companies less.' Mr Lau said Sars, the threat of terrorist attacks and huge payouts ordered by courts over the past 10 years had caused big losses to insurance companies. Without a cap on the maximum payout, even firms that were unlikely to fall victim to Sars might face a 30 to 40 per cent rise in premiums, he said. Rates for private hospitals and nursing homes would increase by four to six times. Mr Lau noted that car insurance payouts were now capped at $100 million. The Hong Kong Federation of Insurers plans to appoint a consultant to study capping workers' compensation payouts before sending a formal proposal to the government. The idea has already won preliminary endorsement by Insurance Commissioner Richard Yuen Ming-fai, who said it would benefit the insurance industry by helping insurers better manage their risks. Mr Yuen noted that similar rules were already in place overseas. Legislator Bernard Charnwut Chan, who represents the insurance sector, said Secretary for Economic Development and Labour Stephen Ip Shu-kwan had agreed to have discussions on whether a cap should be introduced. Speaking after a meeting between medical insurance representatives and officials on Sars coverage yesterday, Mr Chan said he wanted to see the $2 million limit on statutory claims increased to discourage workers from going to court. But he supported the imposition of a cap on the maximum payout that courts could order. Other lawmakers expressed reservations on capping payouts, fearing it would hurt the interests of workers. Chan Kam-lam, economic affairs spokesman of the Democratic Alliance for Betterment of Hong Kong, said it would be hard to set a cap that would satisfy every party. 'A cap at a low level would erode protection for our three million workers, and that would be unacceptable. However, if the cap is set too high, then the premium is unlikely to go down a lot,' he said. 'It would not be fair to employees if they could not get enough protection from insurance companies.'' Democratic Party economic affairs spokesman Sin Chung-kai said it was important to ensure workers' interests would not be hurt by introducing a cap. 'The government and the insurance industry should not set the cap themselves. They should work with labour unions to work out a cap that would satisfy all parties,' Mr Sin said. 'It is not only the insurance companies' views that need to be considered; workers' interests should also be kept in mind.'