More help needed from insurers to improve the safety culture

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.