Insurance premiums come not far behind taxes in the popularity stakes, even if gripes about both typically elicit a similar response - 'tough luck'. One might as well moan about mortality. Employers' complaints about expensive worker compensation insurance, however, have led the government to consider assuming responsibility for its provision. Last week, the Hong Kong Federation of Insurers hit back, saying government intervention would cost jobs and lead to higher taxes. Is this an industry simply protecting its own, or does a market failure exist that justifies such draconian action by the government? All employers must provide Employees' Compensation (EC) in the event workers are injured on the job. Complaints about high premiums aside, it can be difficult to get any coverage whatsoever for certain occupations, such as abseiling window cleaners and minibus road runners. Yet, any notion that the local insurance industry is selectively creaming off the best business is not borne out by its dismal returns. While more than 70 insurers compete in the $4 billion EC market, it continues to record losses. Last year, the deficit on liability payments to injured workers was $103 million, and in 2002, it was $162 million. With the HKFI calculating accumulated industry losses at $5 billion in the past decade, it might seem premiums have been set too low, not too high. Ultimately, the insurance industry's credo is that nothing is uninsurable if the risk-based price is right. Surely, this is an ethos Hong Kong can live with. If mini-bus operators want lower premiums, then they can keep four wheels on the road and build up a no-claims bonus just like the rest of us. Adopting specific measures - such as risk pooling for high-risk sectors - would surely be less disruptive than transferring the industry lock, stock and barrel into public hands. Nor would the benefits of potentially cheaper public EC provision insurance be distributed equally. The vast majority of premiums and claims come from the construction and property sector. The riskier end of the spectrum includes, not surprisingly, digging tunnels and putting up mega tower blocks. If such dangerous work requires higher premiums, so be it. Construction firms, traditionally the whipping boys of the property industry, may already be operating on wafer-thin margins and therefore struggle to pass on higher insurance costs to their clients. But this market failure hardly justifies government provision. It is also unlikely the public sector could duplicate private enterprises' efficiency when it comes to managing risk and claims. Indeed, the HKFI notes that coverage costs as a percentage of contracts have fallen to 1 per cent from 3-4 per cent in recent years due to improved safety and claim management. The government has no official position on this proposal now under consideration. But it looks like one that should be dropped.