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More help needed from insurers to improve the safety culture

23 January 2013

The ways in which some insurance companies operate is having an adverse impact on health and safety, says Geoff Hooke who is calling for action by insurers and a wider debate to minimise these problems There is little

The ways in which some insurance companies operate is having an adverse impact on health and safety, says Geoff Hooke who is calling for action by insurers and a wider debate to minimise these problems

There is little doubt that there is a need for insurance services to ensure that those who suffer at work are able to receive adequate compensation and it is reasonable that the free-market economy should enable insurance companies to operate freely on behalf of their shareholders.

There is also little doubt that insurers have been a major influence in the enforcement of some regulations by increasing premiums where workplaces operate on the limit of their various regulatory requirements.

However, the need to minimise costs results in many claims being settled without any investigation creating a "claim" culture.

One company reported four claims in two months by copy-cat chancers after an original, somewhat spurious, claim had been settled without question. It was only at the insistence of the managing director that the fifth claim was with-held pending an investigation and it is interesting to note that the claimant suddenly lost interest and withdrew his allegation. BSIF conversations with major insurers identified that their business models incorporate over 35% of their premium income as anticipated expenditure against unchallenged claims pay-outs.

Until there is a robust attitude taken by employers to insist that claims are not just "settled" without question, insurance premiums are likely to remain high. It is interesting to note that the "red-tops' highlight some of the "sillies" that occur but I do not recall any publicity on the issue of unchallenged pay-outs.

On the subject of the publication of "bonkers, conkers", what is not often realised is that most of the ridiculous decisions taken by managers on health and safety are insurance driven. In an attempt to minimise their financial risks which could result from claims, company and local authority managers are often bullied into operating in silly ways because of a fear that, if they do not, the insurers will refuse to settle any claims on the basis of the insured client breaching the terms of the policy. Some local authorities predicate 25% of local rates against paying out claims without insurance involvements to ensure that they do not suffer premium increases.

Many companies seeking health and safety insurances on external sites undergo inspections by their insurers. Many insurers do not use health and safety specialists to carry out this function and some contract with external specialists on an adhoc basis. Fine so far, except: BSIF conversations with insurers validated our belief that these inspections are to evaluate the financial risk of a potential claim whereas conversations with site operators suggest a different perception. Most site managers take the view that following a successful insurance inspection, their risk assessments, operating method statements and protection programmes have been validated as adequate - nothing could be further from the truth. One of the top insurers is keen to change this erroneous perception and the BSIF can only welcome that and hope that others will follow suit.

The BSIF believes that the best way to resolve these difficulties is, initially, for a dialogue to take place between enforcers, insurers and safety industry stakeholders to establish the extent and importance of the situation. Hopefully, this dialogue will also stimulate insurers to be better advised regarding the legal responsibilities of their clients. The BSIF cannot understand why the business insurance package premium for a manufacturer of CE marked respiratory protection doubles when he tells his insurer that they are used in nuclear hot areas. The products are CE marked, subject to regular quality audits by independent, specialist, notified bodies by law. The manufacturer has no responsibly whatsoever in respect of where the product is selected, deployed or used or the well-being of the wearer - this being with the employer and the owner of the nuclear site.

The aim of this dialogue will be to ensure that everyone understands the ways in which these matters are approached. The objective has to be a reduction in premiums without any reduction in the settlement of genuine claims which do not reduce the profitability of insurers or their ability to remain solvent. This will be achieved through a wider understanding by clients of the purpose of inspections by insurers and a recognition that it is their responsibility to ensure the safety of their staff without seeking to mitigate it through insurer inspections. Couple this with a more rigorous investigation of claims before any settlements are made and, over time, the culture will change towards honest compensation for genuine injuries, safer workplaces and a reduction in "elf and safety" jibes to sell newspapers.