If you are paying a significant insurance premium can you afford to not abide by its terms?
As an employer you have a legal obligation to ensure the safety of your employees, contractors and persons affected by your work. It’s important every employer effectively manages safety in their workplace.
According to the Injuries Board Annual Report 2012 the number of personal injury claims in 2012 has increased by 7%. So we can see that the claims culture is alive and well in Ireland and while many businesses believe they are covered by their insurance policy they may in fact not be as securely covered as they think.
At the Peninsula 24hr advice line we regularly come across incidences where matters go wrong and then go from bad to worse. The old adage of ‘prevention being better than cure’ is certainly true when looking at safety management. So the best case scenario is one where the accident or injury doesn’t occur. Unfortunately there are many injuries – almost 7,000 a year – which result in reportable injuries, and many more which result in claims. How the business or organisation manages safety will dictate how the claim is handled, if in fact it is defended or paid out without going to court.
In 2012 a total of 29,609 claims were lodged with the Injuries Board. Commenting on the figures, the Board says it is the high volume of low to medium claims which drives the underlying compensation claims bill that ultimately impacts on insurance premiums. Over the period from 2007, the overall number of claims made has increased by 24%, up from 23,345 in 2007 to 28,962 in 2012. Over the same period, the numbers in employment have fallen by 13%, from 2,136,100 to 1,869,900 (based on CSO figures for the quarter April to June 2007 and 2012).
What you need to keep in mind is that the insurance company is looking to find the most economically viable method of resolving the claim. Whether the organisation is morally right does not come into the equation. It is true that the employees actions can and will be taken into consideration and there is an element of ‘contributory negligence’ which is brought to bear in some cases.
A typical example came through the courts early last year when a machine operator was seeking compensation for losing the tip of a finger in a machine. He claimed that “no one told him he shouldn’t have put his hand inside the machine to clear a blockage”. You may think that most rational 5 year olds would know not to put their hands inside a moving machine, let alone a grown adult – but the law doesn’t look at it like that. What swung the case in the employers favour was the fact that 2 years previously they had carried out an induction with this employee, where it was recorded that he was informed that ‘should the machine become blocked, he must switch off the machine, clear the blockage and restart the machine’ this was contained in writing on an induction document which the employee signed. On the basis that, as a competent employee, he should have known better - the case was thrown out. Without following the practice of carrying out formal inductions with written documents signed off, the case would have been settled out of court in favour of the injured employee.
Contrast this with another case where an employee sustained a manual handling injury, it transpires that the employee had never received any manual handling training and there was no manual handling risk assessment. The insurance company decided to pull the cover as the employer had not effectively managed safety, he had not carried out a risk assessment and had not trained his employees as required under the legislation. The claim then moves from ‘injured employee vs. insurance company’ to one of ‘injured employee vs. business owner’. What makes matters worse is that the business owner has little or no defence and in addition to having to pay compensation he may well also have a prosecution through the Health & Safety Authority to deal with.
What many employers or business owners are not aware of is that if they fail to adequately manage safety, their insurance company may deem these grounds to repudiate a claim. Effectively this means the premiums paid have been to no avail, from the insurance company’s perspective they will see that the premium rate charged is based on the assumption and condition that the business is run in line with legislation and best practice. If this is not the case they are within their rights to see it as ground for breach of contract. Employers need to be vigilant and ensure risk assessments are carried out in the workplace, from the risk assessment it will identify other issues such as training, work practices and equipment requirements. If you need advice or assistance give Peninsula Business Services (Ireland) Ltd a call on 01 855 5050 for some advice.
