Liability insurers will provide at least 21 days notice of their renewal terms under a new Statement of Good Practice published on Wednesday by the Association of British Insurers.

Responding, minister for work, Des Browne, said: "This is a welcome step in the right direction and I hope it will go some way to helping businesses who have experienced difficulties during the last year."

Forum Response: Association of British Insurers

Mary Francis, director general of the ABI, said: "Policyholders are right to seek this reassurance, and insurers are glad to give it.

"At a time when costs, and therefore prices, have been rising insurers are very much aware that their customers need sufficient notice of changes in their premiums."

Forum Response: Federation of Small Businesses

John Emmins, national chairman of the FSB, said: "At present insurers can in theory just let cover expire so any minimum notice period is a step in the right direction. But 21 days may not be long enough.

"FSB research suggests that over half of the businesses that are forced to look for an alternative insurer take more than 3 weeks to find cover. I am asking insurers to see the Statement of Good Practice as a minimum standard and work towards providing at least a month's notice wherever possible.

"Liability insurance premiums have been mushrooming for over a year and this is the first real change in the relationship between insurers and their clients.

"But the liability crisis will not be solved by longer notice periods and improved customer service alone.

"The government must come up with a detailed plan of action when the Department of Work and Pensions publishes its next report in September."