1. WHAT IS ELTO?
The Employers’ Liability Tracing Office (ELTO) is an independent industry body comprising of Employers’ Liability (EL) insurers and other stakeholders representing the interests of claimants. It was set up in April 2010 to be responsible for recording and managing a central database of EL policies known as the Employers’ Liability Database (ELD). This database records the majority of EL policies held by individual employers and makes it easier for personal injury claimants, in particular those who have been exposed to asbestos or who suffer long-tail injuries, to identify their employer’s previous insurers, enabling them to obtain compensation where appropriate.
Insurers have been required to send details of all new policies and renewals to the ELTO since April 2011. This is so that, over time, this will build a comprehensive record of EL policies with their associated insurers for UK employers. Claimants will be able to access this database via www.elto.org.uk.
Primary legislation has been changed to compel insurers to provide information, but until this time, the FCA introduced rules that were added to the ICOBS (Insurance: Conduct of Business sourcebook). These are known as the Employers' Liability Insurance: Disclosure by Insurers Instrument (ELIDII) and can be found in section 8.4.
RSA is a member of ELTO and is fully committed to fulfilling its obligations under ELIDII.
2. WHAT ELTO MEANS FOR YOU
Although FCA requirements relating to ELTO apply to insurers we can only meet our obligations with your help. We need your active support to capture the Employers’ Reference Number (ERN) and subsidiary information from your customers. From April 2012 it was an FCA requirement to capture ERNs and subsidiary information for all new and renewed policies.
ELTO members, such as RSA, need to supply this information to the ELD on a monthly basis, including their current book of all live EL policies.
If you transact business with RSA, then you are unlikely to transfer information directly to ELTO. Where RSA already holds the information stored on our systems this will be forwarded on to ELTO automatically.
You will be required to supply us with all subsidiary details and related ERNs for all policies with EL cover. You can supply us with this information via your normal RSA contacts. This will be recorded with the policy information we already hold and will be included in the automatic data transfer to ELTO.
SCHEMES AND DELEGATED AUTHORITIES
If you operate a scheme with RSA, we are going to need your help in order to make sure that we’re fulfilling our requirements for ELTO. As you will be holding all of the information about your customers, we will need you to pass over the pertinent parts to us on a monthly basis.
This information will be captured on the ELTO data capture form which you can download here.
This form will need to be completed every month with details of all transactions on policies with EL cover that have been issued under your scheme or delegated authority. We would ask you to return these forms to your usual RSA contact by the 15th of the following month.
It’s important that we receive this data on this date every month so that we have enough time to check the data and upload it to the EL database in advance of the required time limits. Failure to get your returns in on time may leave RSA open to sanction by the FCA and may result in the terms of your delegation or scheme being re-evaluated.
The ELTO has put together a guide for brokers to assist them in filling in the capture form. Download the guide here.
3. WHY USE THE ERN?
An Employer Reference Number (ERN) is more commonly known as the Employer PAYE Reference and is a reference number assigned to a business and used by HMRC to record employees’ tax and national insurance contributions.
There’s been some concern around the fact that the ELTO are using a policyholder’s ERN to identify them within the EL database.
Some worry that this information will be used to cross-reference information with HMRC, or with other governmental bodies. However, this is not the case.
The FCA chose to use the ERN because it is a unique reference associated with each UK Company; in simple terms, ERNs are to companies what number plates are to road vehicles.
The advantages of using the ERN are:
- Nearly all UK companies with one or more employees has an ERN
- Each ERN is completely unique
- The ERN never changes retrospectively
- The ERN is printed on a large amount of documentation that the claimant should have access to, such as payslips, P45s and P60s You must make sure that all information submitted contains the policyholder’s ERN. Some larger customers may have several ERNs - all of these should be submitted to RSA.
If you do have any concerns:
- Download the latest ELTO briefing guide for employers
- Download a comprehensive guide issued by BIBA from their website
4. ELTO FREQUENTLY ASKED QUESTIONS
If you have a question that isn't answered here, contact your usual RSA representative for more information.
If a customer has multiple entities with different ERNs, would a separate record be required for each entity?
If a policy covers a company with four subsidiaries, five individual records will need to be sent to the EL database. The first entry will be the parent company and the ‘Policy Type’ field on the ELTO template must be set to 'P' (for parent company). The following subsidiaries will be indicated with 'C' (child company).
Where a customer has multiple entities but these are not subsidiary companies, will all entities be recorded as the parent record?
Provided that they are all covered under the same policy, the main customer needs to be defined and a parent record created. The other parties to the policy should be assigned child records.
If the companies do not share the same EL policy, each must be named as parent companies under their own separate records.
What happens to policies cancelled mid-term?
Currently, the functionality of the database doesn’t cater for cancellations. Instead, we can send a new record with a change in cover end date. However, this will not override the original policy record but instead will indicate a change in the policy by way of the additional record in the policy history.
Additionally, our own system will capture the policy’s cancellation date which we will be able to impart should we receive a claim in error.
What about EL business written from an overseas office on a Freedom of Services basis: would details of these need to be fed through to the ELD?
If the customer is based overseas, but has UK subsidiaries, this information must be passed on to the database.
Information on the overseas customer should be sent as a parent record with the ERN exempt flag set to 'Y'; UK subsidiaries can be issued as child records with ERN details.
What’s the purpose of the ‘original insurer’ field on the ELTO template?
The original insurer question is to take into account those circumstances where one insurer has taken over or merged with another. RSA will populate this field with information for policies that were initially incepted with either Royal Insurance or Sun Alliance.
Brokers should use the 9999 code in the original insurer field.
What about single rated package policies where a customer could automatically receive EL cover as part of a package, despite not having any employees and therefore, no ERN?
This would constitute a legitimate ERN exemption where the ERN exempt flag should be set to Y.
ELTO will be running audits to ensure against the abuse of the ERN exempt flag.
What should I do if a customer has employees but pays them less than the basic tax allowance, and therefore doesn’t have an ERN?
We would record this as ERN exempt as there is a legitimate reason why they have no ERN.
What about companies where employees' salaries are paid by a foreign-registered company that has separate dealings with HMRC and no ERN?
In these circumstances we would see no alternative other than to record as ERN exempt status.
As long as the nature of this exemption is well documented, this is not a problem. If the PAYE is through an overseas company this will be a legitimate exemption and so the ERN exempt flag will need to be set.
A charity using volunteers would still require EL cover but will not have a PAYE reference as volunteers aren’t paid. Are they ERN exempt?
In this situation you would need to show ERN exempt as ‘Y’. However, you need to be careful as many charities do have paid employees in some positions.
What do I do if a customer has multiple ERNs?
Please provide all of the additional ERN information and the most relevant will be supplied to the ELD. ELTO is considering specifically how to tackle this issue in the future and once more information is available we shall make it known to you.
How should I deal with subsidiaries with no employees that have been set up by parent organisations for tax or property development purposes?
The EL database should only contain UK companies who have EL insurance so those subsidiaries without should not be submitted to the database.
Some companies have employees and outsource payroll operations to umbrella bodies so the ERN supplied will not be in the name of our customer. What should I do?
As this is not a case where the customer is ERN exempt then the ERN will still need to be supplied despite this not being in the name of the customer.
If an insured customer says that they are ERN exempt, are we expected to do any more than have a sense check based on the number of employees?
Work is underway to establish a set of criteria that can be used to determine whether a customer should receive an ERN legitimate exemption, and the results will become part of the new audit process to ensure against abuse of the ERN exempt flag.
You are currently not expected to do any active investigation.
If a company changes its name part way through a year but effectively remains the same business, we would usually amend the customer’s name on the policy, rather than cancel the policy and issue a new policy in the new name. From an ELTO perspective are there any issues with this arrangement?
No, there would be no issues. ELTO accepts this as a mid-term adjustment which would be applied to the customer name as all other details would remain the same.
5. SUPPORTING DOCUMENTATION
ELTO have provided guides to answer any further questions you or your customers may have.