At a glance
- Over the past few years, there has been a reform in health and safety and the issue of compensation culture
The last three years have seen the reform of health and safety remain a key focus in the government’s bid to promote growth, reduce bureaucracy and address the issues of a compensation culture.
As far back as 2008, the Health and Safety Executive (HSE) issued its strategy for Great Britain, as a call to action asking insurers to help promote good health and safety management and encourage a commonsense approach.
In 2010, David Cameron appointed Lord Young to carry out a review of health and safety and the issue of compensation culture. The recommendations made then still form the basis for reforming the current system in the UK today. However, since that time there has been significant activity to take this agenda forward.
In March 2011, the Government published a progress report on the implementation of the Lord Young recommendations as well as plans for further reform. There were three key aspects to this:
- Launch the Occupational Safety and Health Consultants Register (OSHCR) to address the issue of rogue health and safety consultants, and ensure that businesses have access to competent and ethical advice when engaging such services.
- Shift the focus of health and safety enforcement activity away from businesses that do the right thing, and concentrate on those with higher risk areas, and dealing with serious breaches of health and safety regulations.
- Seek to simplify health and safety legislation and guidance, and in doing so ease the burden on business.
No radical change needed
On the last point, the government set up an independent review of health and safety regulation under Professor Löfstedt. He reported in November 2011, advising the government that in general he found no case for radically altering current health and safety regulation. However, he did put forward a number of further recommendations. For example, he recommended that self-employed workers whose work posed no potential risk of harm to others should be exempt from health and safety law.
He also recommended that to improve clarity on what is required, the HSE should review all its Approved Codes of Practice (ACoPs).
In addition to this, we have also seen further initiatives. For example:
- The Red Tape Challenge (focusing on health and safety), designed to promote public discussion about ways in which the aims of existing regulation can be met in the least burdensome way possible.
- The prime minister’s Insurance Summit aimed at tackling the compensation culture and perceived issues around obtaining insurance cover.
- The establishment of two challenge panels, the Independent Regulatory Challenge Panel (that looks into complaints regarding advice given by HSE or LA inspectors about health and safety which applicants consider to be incorrect or goes beyond what is required to control the risk adequately) and the Myth Busters Challenge Panel to investigate complaints regarding the advice given by non-regulators such as health and safety consultants etc.
- The introduction of Fee For Intervention (FFI), the HSE’s cost recovery scheme. From November, those who break health and safety laws are liable for the recovery of HSE’s related costs, including inspection, investigation and taking enforcement action.
So why are insurers interested in this?
Well, insurers underpin the compensation system and have an enabling role to play in society – imagine how many people would start a business if they knew they would be solely liable for 100% of the costs of accidents, fires or thefts. There is also a concern about compensation culture in all forms of activity – workplace, sporting activities, charities, local authorities – particularly as much of the debate has focused on the criminal law element of health and safety legislation, but not the civil law one.
Also, as the reform agenda has developed, there have been certain challenges for insurers along the way.
One of the key recommendations put forward by Lord Young required the insurance industry to publish a code of practice for health and safety for businesses and the voluntary sector. The aim of this was to give business and the voluntary sector reassurance that they have complied with appropriate levels of health and safety, and the ability to obtain insurance without having to employ the services of a health and safety consultant. The ABI were to facilitate this.
‘Health & Safety for Businesses and the Voluntary Sector – Key Principles’ was published in November 2011. It sets out the insurance industry’s response to the Lord Young requirement, identifying a number of key principles that insurers look for when evaluating the management of health and safety. These include senior management commitment and leadership; competent assistance; a structured approach; and the completion of suitable and sufficient risk assessments. There will be a degree of variance in the way in which individual insurance companies view these, but broadly this document outlines what insurers want to see.
Professor Löfstedt also put forward proposals that could have a bearing relating to Employers’ and Public liability claims. In particular, he recommended that those health and safety regulatory provisions which impose strict liability should be either qualified with ‘reasonably practicable’ where strict liability is not absolutely necessary or amended to prevent civil liability from attaching to a breach of those provisions. A breach of statutory duty can have an implication on outcome where causation can be demonstrated.
All of this specific activity relating to health and safety should be viewed against the backdrop of Lord Jackson’s reform on legal costs. In January 2010, he issued recommendations on civil litigation to address issues that have added to compensators’ and policyholders’ costs (including ‘no win, no fee’ and ATE fees) and the pressures to settle claims rather than fight them.
This reform agenda has evolved significantly and is set to continue. It is one worth following, as there are implications for both employers and stakeholders alike. For insurers, their knowledge, insight and perspective will remain invaluable as this debate continues – particularly for those customers looking to add real value to their insurance provision.