The long-standing problem of establishing an Employers’ Liability insurance history has been addressed by the establishment of the Employers Liability Tracing Office, which keeps a database of EL policies issued by Insurers. Insurers are obliged to provide updating information on an on-going basis.
Although the database is an essential component that allows the Claims Portal to work, it also allows Claimants to identify their previous employers’ insurers when bringing a claim for injury arising from historic exposure to noise and vibration and dust, particularly asbestos dust.
The database also allows Insurers to identify other Insurers who might contribute towards settlement or the defence of historic disease claims.
This growing record of EL Insurers’ cover will provide increasing efficiency. Less time and resources will need to be spent investigating coverage. Obtaining agreement on apportionment between Insurers will be less reliant upon co-Insurers response times. However, this increasing ease of identification of Insurers is currently not matched by corresponding ease of access by Insurers to the information necessary to assess the justification for the claim.
With long-tail disease claims such as those arising from exposure to noise, vibration and asbestos, by the time a claim is made it is common for employers to no longer exist. Those that still trade have often destroyed the Claimant’s employment records (sometimes as a matter of policy not to retain records for more than a few years). Staff turnover typically means that current employees have no knowledge of the Claimant or his work conditions or activities, or knowledge of previous employees who had knowledge of the Claimant’s work environment.
The dynamics of business mean that even if an employer is still trading, it is not unusual for the premises where the Claimant worked to no longer exist, or for historic health and safety records such as noise assessments, risk assessments, and other control measures, to have been destroyed.
The practical effect of this is that an Insurer often has no evidence to rebut the Claimant’s allegations. If the Claimant can prove injury then his evidence, unchallenged by documentation or other witness evidence, is likely to be accepted. This inevitably leads to the Claimant establishing an Insured’s breach of duty or negligence, whether or not the Insured was actually at fault.
The limitation period in disease claims is based upon the Claimant’s date of knowledge of injury which might not occur until decades after the alleged exposure.
If employees suffer a traumatic injury at work the problem is not only obvious but there is an immediate adverse financial impact to the employer through having to pay employees who are not working through injury, lost productivity and increased insurance premiums.
Injury arising from exposure to noise and vibration and injurious dust is usually not apparent during employment. There is no immediate adverse financial consequence to the employer, and through insurance the financial risk of a disease claim is passed to the Insurer. The commercial nature of the Insured’s business makes it likely that as a result of the financial risk of a claim having been passed to someone else, no resources need to be put into preserving evidence (if it exists at all) of compliance with Regulations.
Until recently, Insurers might have been justified in taking the view that the risks of such long-tail claims could be accommodated in adjustments to premiums charged to those businesses deemed to be at risk of such claims. However, the easier identification of Insurers through the ELTO database means that an Insured is now more likely to be a potential target of litigation far into the future. Further, if the need to obtain and retain evidence needed to defend potential future claims is not addressed by the Insured during the period of cover, then it is more likely that employees will be exposed to injurious hazards.
Businesses regard insurance as a price-sensitive commodity. They are paying for someone else to carry the risk and having done so, probably want to be left alone.
Is there a way of persuading Insureds to provide information on a yearly basis that will enable Insurers to keep sufficient information to be able to resist future disease claims? Probably not universally. Cover for the risk of long-tail claims is only part of the overall insurance product. However, the Public Liability element of commercial Policies often contain conditions and restrictions to specific risks such as hot works, and although there is limited scope for restricting potential liability in Employers’ Liability claims, incentives could be included in the product being offered to an Insured.
For example, offering free electronic archiving of certain health and safety documents such as noise and vibration surveys, Risk Assessments, Method Statements and Health and Safety policy documents would preserve evidence and could be presented as an additional free service to the Insured. It could even be presented as a service that, if used regularly, could add value / saleability to the Insured’s business should the current owners wish to sell in the future. Current scanning and electronic archiving techniques are cheap ways of preserving evidence indefinitely. They would help to pass control of historic evidence to Insurers, who are the ones with the financial interest in such evidence.
Such preservation of evidence has potentially far-reaching effects. The collation of information should alert Brokers and Insurers to potential breaches of Regulations, and an informed Insured will then be in a position to rectify this, thus avoiding injury to employees. In turn that will lead to fewer future claims, and those claims that are made will be more easily and quickly defended.
The need for preservation of evidence by Insurers is further demonstrated by the reported proposal by Companies House to delete the details of companies that have been dissolved after six years. Although the Association of Personal Injury Lawyers represents this proposal as a threat to access to justice by preventing potential Claimants from identifying their former employer (unlikely, given the National Insurance Contributions Office keeps such records) such loss of information would prevent Insurers from identifying former Directors who might be able to provide information with which to defend future claims.
This approach requires a good relationship between the Insurer / broker and Insured, which is a goal with significant benefits. An Insurer which can demonstrate how it can help to make a business safer and thus more efficient, and offers to take some of the burden of record-keeping required by Health and Safety Regulations from an Insured is likely to diminish the perception of insurance as a commodity, and make an Insured more likely to renew cover.
Investing time and resources in this way will help Insurers overcome a perennial evidential problem when dealing with future long-tail disease claims. The combined effects of the introduction of the Employers’ Liability Insurers’ database and Qualified One Way Costs Shifting has made the need for Insurers to preserve evidence even more pressing.