A risky business
23 January 2013
Georgina Bisby speaks to Jim Wilkes, senior casualty underwriter, of Zurich Insurance and gets an insurer's perspective on recent developments in health & safety...
The most frustrating thing about the recent examination
For example, the misconception that Employers Liability insurance providers can refuse to pay out if a policyholder fails to implement any agreed risk measures is, in Wilkes's view, still widespread. "This simply is not the case and hasn't been for over three decades," he explains. "As set out in the Employers Liability Compulsory Regulations , the insurer cannot refuse to pay a claim just because the policyholder has failed to take measures to protect their employees." The problem, according to Wilkes, is that too many people fail to make the distinction between the Health & Safety at Work etc Act 1974 (HSWA) which is criminal law aimed at protecting employees and others affected by work activities, and civil law, which deals with disputes between individuals and organisations, for example an injury claim. The purpose of criminal law is to punish and deter other wrongdoers and the HSWA Act is enforced by HSE and Local Authorities. It is not possible to sue for damages under the HSWA Act itself although a breach of health and safety regulations may be cited as part of a civil law claim based on a breach of statutory duty. The purpose of civil law on the other hand is to compensate the injured party which is where insurance companies come in. Explains Wilkes: "Unfortunately, parts of the media have mixed up health and safety regulation in the workplace with the compensation culture and portray them as one and the same thing. As the LÃ¶fstedt Review concludes in general there is no case for radically altering current health and safety regulation.
However it is the compensation culture which is creeping in on the back of this which is the problem." Wilkes is in no doubt about the presence of a compensation culture in the UK, or the fact that it's a problem, especially in the motor and public liability environments. As an insurer he sees a nation paralysed by fear of being sued which people incorrectly link to health and safety regulation.
The problem is not the regulations but the interpretation of them by some people:"People who are organising community events for example, who cannot be expected to be expert in law and have little or no awareness of HSWA, hear headlines about 'Elf and Safety' and panic. So you get a situation where people running organisations or organising activities, which are not in any way impacted by HSWA, are inaccurately making decisions on grounds of health & safety. The media then report these stories and they become self perpetuating." Although this confusion is acknowledged in the LÃ¶fstedt Report (see chapter 9 The Wider Perspective), Wilkes fears that it is now so endemic it will require a considerable effort by all parties to challenge it: "Despite initiatives such as the HSE's myth busting campiagn you will frequently hear people who you would expect to know better getting mixed up (citing the example of a radio programme involving a representative of a safety body and a local councillor). If supposedly well informed people are getting it wrong it is not surprising that the ordinary citizen gets confused by what they read and hear." But Wilkes believes that a turning point may be in sight. Not in the form of the LÃ¶fstedt Review which was concerned ostensibly with health and safety regulation but in the progress of the Legal Aid, Sentencing and Punishment of Offenders Bill (more easily known as LASPO) which the government has introduced and is currently going through the parliamentary process in the House of Lords. The relevant elements of the Bill, which relate to civil law, were drawn up in response to the review of civil law litigation costs carried out by Lord Justice Jackson.
This Bill aims to to tackle escalating legal costs through measures such as banning of referral fees, and making success fees and After The Event Insurance Premiums irrecoverable from defendants. If the Bill is implemented fully, together with the other recommendations emanating from the Jackson review, this could be a game changer. "Once there is no longer constant fear of being sued over everything and anything things will change.
Hopefully the Bill will be implemented in 2013." In the meantime, Wilkes believes the insurance industry must speak up, not just to address misunderstandings but also because dealing with almost tens of thousands of workplace claims a year, as Zurich does, means they are well placed to give an informed and insightful view into risk issues. "We are contacted on a daily basis with questions about the management of risk by people who say they have nowhere else to go for relevant advice. With the closure of the HSE info line and rumoured uncertainty over the future of the HSE website we see this volume of enquiries rising," he explains. Wilkes confirms that a lot of the advice that they give is based on HSE guidance. "What we can add is a factual knowledge of what claims are actually being made and what risk management measures have proved effective in reducing the incidence of losses. We can also advise policyholders on how their organisational procedures can be strengthened to make the organisation more resilient against claims. Often the guidance offered requires an investment in time and commitment rather than money. Our views are sought because few consultants can match an insurers breadth of insight into risk issues." In respect of the ongoing debate about risk assessments, Wilkes confirmed that whilst it is not Zurich's practice to carry out risk assessments for customers they are well aware of the issues surrounding risk assessments and have developed an approach to risk assessment which has been used by some of their customers. "Most commercial businesses, are tired of being constantly audited so there is little value to our customers if we were to merely repeat what they have already done.
"What we can give to a customer is our experience based on the claims we handle and the insights we collect from customer visits. Rather than promoting an over the top approach to risk issues we can actually help temper it because we can give a perspective on what risks are 'real' and should be given priority treatment." Keep an eye on Zurich's website where later this year it will start publishing straight forward guides on workplace hazards.