In this occasional series of insights from the insurance industry, Jim Wilkes explains
the likely changes to criminal and civil law that those involved in workplace risk
controls must know
In this occasional series of insights from the insurance industry, Jim Wilkes explains
the likely changes to criminal and civil law that those involved in workplace risk
controls must know
Workplace injuries can
expose an employer to two
different types of law.
Firstly, criminal (regulatory) law
where they have breached H&S
regulations and for which the
employer could be fined or in the case
of directors, fined or even
imprisoned. Secondly, civil law which
deals with the legal action that an
injured employee could bring against
the employer. This latter action would
be for damages for the injury and any
consequential losses, for example any
wage loss. The cost of civil claims has
increased considerably in the last two
decades and much of this increase
relates to the legal costs incurred with
such claims. Indeed for some claims,
the damages that the claimant receives
can be less than the fees charged by
his legal advisers.
Both the criminal law and civil law position is likely to change in
the next few months. The Government has introduced a Bill
(Enterprise Bill) which amongst other measures, seeks to remove
'strict liability' from health and safety provisions. This would mean
that to succeed in a civil claim, the injured party would have to
prove that his employer had been negligent, that is they failed to
take reasonable measures (as far as reasonably practicable).
Currently where a strict liability provision exists it is possible
to succeed in a claim even if the employer had taken all
reasonable measures, but despite this the employee was injured.
Whether this measure (if introduced) will actually reduce
potential claims against employers remains to be seen as many
claims against employers would equally succeed under
negligence arguments.
Changes to the civil law processes
April 2013 sees the introduction of wholesale changes to the civil
law processes. These changes arise partly from the 'Jackson'
review, partly from the Legal Aid, Sentencing and Punishment of
Offenders Act and also from changes introduced by the Ministry
of Justice. In simple terms, the overall purpose of the changes is
to try and reduce the legal costs involved in personal injury
claims and to correct what has been seen as an imbalance
between claimants and defendants, which made it potentially risk
free for a claimant to bring a claim.
The changes are complex. Assuming that they are all
implemented in April 2013 it will be at least one year before it is
possible to know whether the measures have achieved their
purpose. The headline issues include the removal of success fees
whereby a claimant lawyer received a top up (success fee) from
the employer's insurer in addition to their costs incurred. Instead,
there are 'damages based agreements'
which mean the claimant's representative
can take up to 25% of the claimant's
damages, giving the claimant a financial
interest in his own legal costs.
After the event insurance policies, the
premium for which also had to be
funded by employers' insurers, will go.
Referral fees which have become a
feature of personal injury claims in
recent years (and have added to costs)
will be banned. All of this sounds
positive and should help to contain
insurance premiums which are very
sensitive to the amount of costs incurred
in dealing with claims.
However, it is likely that because of all
the changes, damages awarded to
claimants could increase by an average of
10%, and potentially more depending on
the type of injury class. Employers and
their insurers will have a very limited
time period to make liability decisions
(30 working days for workplace accidents) and even if the insurer
successfully defends a claim any legal costs incurred will not be
recoverable from the claimant. Moreover, the tactics involved in
dealing with claims may change and employers will need to have
an insurer and broker who are geared up for the changes and can
help navigate the employer to avoid pitfalls.
Prevention is better than cure
It is impossible to predict the outcome of the totality of these
changes at present. It will require at least a year after full
implementation before the claims position stabilises. The key is
to cut through the complexities and to guide employers on what
they need to do; hence the need to talk with your insurer and
broker. A point which often gets missed when considering
changes in the claim environment is that prevention is always
better than cure.
Employers who wish to minimise their involvement in claims
should maximise their approach to risk management. For
example, where Personal Protective Equipment (PPE) is a
requirement, is the employer implementing best practice by
recording the issue of PPE; are they training employees properly
in its use; and are they taking a consistent approach to enforcing
the use of PPE?
Legal changes always lead to a period of uncertainty which can
last for years. Our recommendation would be to develop and
maintain an effective risk management regime so the costs
involved will be far less than dealing with the consequences of
risk management failures.
Jim Wilkes is the senior casualty
underwriter at Zurich Insurance
