Additional memorandum submitted by ABI
The ABI (Association of British Insurers) represents
the collective interests of the UK's insurance industry. The Association
speaks out on issues of common interest; helps to inform and participate
in debates on public policy issues; and also acts as an advocate
for high standards of customer service in the insurance industry.
The Association has around 400 companies in
membership. Between them, they provide 94% of domestic insurance
services sold in the UK. ABI member companies account for almost
20% of investments in the London stock market.
This paper sets out the ABI response to the
BRE consultation on improving outcomes from health and safety.
Insurance plays a vital role in incentivising good health and
safety practice in the workplace, and insurers are leading the
way in promoting occupational health and ensuring effective rehabilitation.
1. Do you believe the British health and
safety system achieves the right balance between protecting workers,
and the demands it places on employers and others?
Given the UK's positive record on health and
safety, we are clearly getting something right. However, we should
always be ready to accept improvements and streamlining to the
One of the key areas is in getting sick and
injured people back to work, on which we have a relatively poor
record. It seems illogical to be successful at preventative work,
but to leave those who do become absent to languish without adequate
support or rehabilitation. Not only is this bad for employers,
it is disastrous for employees and their families, and also has
repercussions for the state, in the form of lost tax receipts
and increased benefit payments. The UK system needs to have more
occupational health services and vocational rehabilitation built
More on ways to improve the UK's record on better
return to work rates is contained in question 7.
2. Are legal duties applying to the charitable and
voluntary sectors sufficiently clear to support charitable and
voluntary activities whilst protecting the people affected by
Insurers play a major role in helping organisations
in the charitable and voluntary sectors manage risk and access
For example, in 2005, in conjunction with the
Home Office Insurance Cover Working Group, the ABI ran a campaign
raising awareness of the importance of risk management, with wide
distribution of its pamphlet `Living with Risk' (see attached
copy), and open events for charity organisations to meet insurers.
Individual insurers also undertake numerous
activities to support organisations in this sector in managing
their health and safety systemsfurther information is available
on request. Insurers tailor their products for charities' needs,
accommodating both their core activities and their fundraising
activities with a range of specific products, as well as extending
standard products to cover liabilities particular to the sector.
Insurance products specifically for the charity
Hirers Liability: liability
cover for non-profit users of the premises
Trustee Indemnity: cover for
wrongdoing or breaches of trust by board members
Insurance products adapted for the sector include:
Employers' Liability: cover
for an employee making a personal injury claim extended to volunteers
Employee Dishonesty/Fidelity Guarantee:
cover for the theft of the organisation's money or property by
staff extended to volunteers
Money: raised the age limit
for cover for the theft of money for which the organisation has
Business Interruption: cover
for loss of income which can be incurred by an event, extended
to the event of a patron dying
3. Do you think the way the health and safety
system is perceived by employers, workers and the wider public
in Britain has a significant impact, eg on accident rates, or
on the way employers act?
Unfortunately there is a regular stream of media
articles that are critical of our health and safety system and/or
allege that insurers are blocking events due to health and safety
reasons. In our experience, these stories are rarely based on
fact. Often organisers are blaming health and safety reasons or
insurers when they have wanted to cancel events for other reasons.
On other occasions, the health and safety requirements are proportionate
to the risk. For example, there was a 2007 story on a Father Christmas
being required to wear his seatbelt in his sleigh, even though
he was travelling on the road at low speeds. However, this was
a sensible safety precaution, as the main purpose of a seatbelt
is to protect Father Christmas if another vehicle hits his sleigh.
Falls from trailers are common and part of an expensive problem:
in 2004-05, the human and economic cost of the fall-from-vehicle
incidents was over £36.5 million.
The price of insurance reflects both the probability
of an adverse incident, and the likely costs of such an incident.
For example, even when a fireworks display is expertly organised,
and a regular event, it still has the potential to cause very
serious injury to a number of people, and its insurance will be
4. How can good health and safety management
best be encouraged and recognised?
Insurers play a significant role in promoting
good health and safety management among employers, through providing
extensive supportive material and tailored advice.
For large employers, insurers will often regularly
visit their customers and work with them to identify their risks
and develop good risk management practices. A company's performance
in managing their risk will be reflected in their premiums.
For small employers, insurers provide extensive
material to help their customers identify and manage their risks.
As quoted in the consultation paper, the FSB found that some small
businesses find it difficult to conduct their own risk assessment:
"There are mixed feelings around the
risk assessment process; a good proportion of members actually
finding it `straightforward' (32%) but still many finding it `quite
difficult' (39%) or even `very difficult' (21%) to deal with."
Federation of Small Businesses
Insurers aim to help businesses conduct risk
assessments through their specialised guides and interactive tools,
such as podcasts, for particular types of business such as those
based in the home, in a shop, salon, office, hotel, restaurant,
or surgery. For example, Allianz's subsidiary Premier Line Direct,
which specialises in business insurance, has won awards for its
tailored products, guides and support for small businesses. Norwich
Union Risk Services offer a range of risk management courses both
externally and in-house, including those accredited by NEBOSH,
IOSH, and IEMA; and Norwich Union offer free specialist advice
on their website, with downloadable forms such as accident report
An underestimated area of work-related risk
is driving for work. For large companies, insurers will often
visit drivers on site to examine particular risks, and suggest
simple solutions, such as painting a line in a parking bay. Many
insurers now offer fleet telematics products, which not only provide
the usual benefits with satellite navigation, but help employers
track their drivers and address any risky driving behaviour to
reduce claims in the future. For small businesses, insurers can
help employers identify any employees that are driving for work,
and ensure they have a driving for work policy in place as well
as adequate insurance cover.
At a market level, the ABI runs the Making the
Market Work scheme, which conveys information about trade associations'
health and safety schemes to EL insurers, to help members of those
trade associations gain access to EL insurance. Making the Market
Work currently involves 15 trade associations, representing over
As premiums for small businesses may be measured
in hundreds of pounds, insurers do not work closely with individual
small customersthis would drive up costs of premiums for
all small customers dramatically and disproportionately to the
risk involved. Furthermore, there is little scope for offering
reductions on such small premiums, and as the consultation document
`Research suggests the size of any discount
on premiums needs to be substantial in monetary terms if it is
to drive firms to improve their health and safety systems.'
5. Do you believe fear of compensation claims
has any influence on the way in which health and safety is managed?
If so, how?
Department for Work and Pensions' Compensation
Recovery Unit data shows that there has been a decline in the
number of successful employers' liability claims over the last
few years. However, fear of compensation claims is driven more
by a fear of being unnecessarily or inappropriately claimed against
rather than being claimed against for legitimate reasons. There
is evidence that the number of unsuccessful claims has risen in
recent years and there appears to be a greater desire among individuals
to blame somebody or something for an accident, even when the
legal standard of care has not necessarily been breached.
For example, this is demonstrated by the
proportion of "lower quality" claims that are being
brought against employers. By "quality", we mean the
strength of the claimant's case for compensation. If weaker cases
are being pursued, we would expect to see more claims failing
to win compensation. A 2005 study by the Centre for Risk and Insurance
showed that the proportion of failed employers' liability claims
has increased steadily from 2002. While an analysis of the latest
statistics from the Compensation Recovery Unit shows that the
increase has levelled out, the proportion of failed employers'
liability and public liability claims rose from 41% in 2002-03
to 46% in 2006-07. Even where claims fail, defendants still incur
costs. These costs are passed on to customers in the form of higher
This increasing willingness to bring forward
lower quality claims may relate to the excessive legal costs that
claimant lawyers are able to claim when they win a case, making
them more willing to take on speculative cases. For example, claimant
lawyers receive almost as much in costs as claimants receive in
compensation for employers' liability claims less than £5,000.
This demonstrates the need for urgent implementation of the Ministry
of Justice's proposals for reforming the personal injury compensation
7. How can regulators best ensure that employers
minimise ill health that is caused or made worse by work?
Managing and reducing the risks at work that
can cause injury or illness is vital, and regulators need to look
at how employers can minimise these risks through making more
use of occupational health (OH) and vocational rehabilitation
(VR). The key to reduced rates of absence is through ongoing systems
that support good practices permanently, and less through one-off
inspections, assessments and checklists.
ABI research in October 2006 showed that SMEs
are much less likely to provide OH services, with only 14% having
an OH department or nurse, 22% using a private OH or VR service,
and 18% using NHS OH or VR services. When asked why they didn't
use these services, over half of SMEs said they didn't think they
needed them, 28% said they were too small, 21% thought they couldn't
afford such services, and 12% had never even considered the question.
Occupational health systems are central to good
health at work. Using skilled and well-trained professionals who
are present at the workplace, or who can be called upon at any
time, businesses can reduce their injury levels, promote healthy
lifestyles and practices, identify potential problem areas and
improve wellbeing. The World Health Organisation Regional Office
for Europe produced its view on the 11 key functions of an Occupational
Identification and assessment of
the health risk in the workplace.
Surveillance of work environment
factors and work practices that affect workers' health, including
sanitary installations, canteens and housing, when such facilities
are provided by the employer.
Participation in the development
of programmes for the improvement of working practices, as well
as testing and evaluating health aspects of new equipment.
Advice on planning and organisation
of work, design of workplaces, choice and maintenance of machinery,
equipment and substances used at work.
Advice on occupational health, safety
and hygiene, and on ergonomics and individual and collective protective
Surveillance of workers health in
relation to work.
Promoting the adaptation of work
to the worker.
Collaboration in providing information,
training and education in the fields of occupational health, hygiene
Contribution to measures of vocational
Organisation of first aid and emergency
Participation in the analysis of
occupational accidents and occupational diseases.
Clearly, not all of these functions are relevant
to every single workplace. And even more importantly, many smaller
employers cannot afford to invest in comprehensive OH packages,
or may consider the benefits to be too small to make this a viable
economic choice. The reach of OH services is currently less than
we would consider optimal.
Indeed, the benefits of OH provision are felt
most keenly in the smallest firms. The CBI/Axa absence survey
of 2007 showed that in firms with between one and 49 employees,
an average of more than two days per employee per year were saved
through providing occupational health services.
Employee Assistance Programmes can be a very
useful way of addressing the needs of employees when faced with
difficulties at home or in their working lives. Offering advice,
information and guidance, EAPs are often provided by insurers
as part of other packages of employer insurance, such as Private
Medical Insurance and Income Protection.
There are many examples of larger firms who
have saved large amounts through investing in comprehensive occupational
health services. It is certainly easier for them to do so. In
order to spread the benefits of OH across the economy, we may
need to consider how fiscal incentives can be used.
Rehabilitation after injury or illness can be
extremely useful in getting people back to work faster, contributing
to lower absence costs for employers and better outcomes for individuals.
There are startling examples from across the world of how much
can be saved by stakeholders through investing in VR services.
In other countries, however, VR is much more widely built-in to
their systems of employer's liability and workers' compensation.
VR is an umbrella term for a wide variety of
interventions which are based on getting a person back to the
workplace, either in their pre-absence role, another role, or
even into another workplace. Broadly, these can include physiotherapy,
counselling, advice, assessment, case management, negotiation,
workplace adjustments, promoting self-management of conditions,
career counselling, and re-training.
Many insurers provide VR as part of Employers'
Liability policies for injuries which happen at the workplace.
This can help to reduce costs for the insurer by potentially reducing
the costs associated with a claim against the insurer. However,
this can only make a limited impact on overall rates of absence,
as five out of six days lost to absence in the UK are caused by
injuries or illnesses that happen outside the workplace.
There are some attitudinal barriers to increasing
the take-up of VR by smaller firms. They may be unaware of the
potential of VR, how to get it, when to use it, and its costs.
These barriers could be overcome by better use of information,
but we will also need to incentivise employers, especially SMEs,
to make use of VR.
Employers feel that, for non-manual staff, OH
provision and rehabilitation rank as the second and third most
significant positive impact on absence respectively.
Given the clear benefits of investing in these, regulators ought
to consider how they can promote good health at work by encouraging
employers to make that investment.
Inspections and communications should include
information about how to get these services, and promoting the
benefits of them.
The HSE has produced a number of excellent reports
and guidance notes on the management and reduction of specific
conditions, especially on stress and mental health in the workplace.
However, it is difficult to see how businesses without Human Resources
or focused OH services can utilise these to best effect. The increasing
tendency towards more remote HR functions has led to a lack of
skilled and qualified professionals based in the workplace itself.
To get the best from OH services, an employer
needs to develop an individual relationship with the provider.
The provider needs to understand the nature of the business, the
physical environment, and the types of conditions, injuries, absences
that are likely to occur. Tailored services will get the best
results. Regulators need to be able to signpost quality services,
and be able to inform employers about where to get them, and what
to expect from them.
9. What improvements could be made to help
HSE and Local Authority inspectors target rogue employers?
A clear distinction needs to be made between
"rogue employers" and "employers who present the
greatest risk". An employer of a small engineering firm may
have very good risk management and health and safety policies
in place, and yet the type of work employees are involved in still
presents a high level of risk. Conversely a "rogue"
employer who does not have a health and safety system in place
in an office may be exposing their employees to unnecessary risk.
By definition, insurers sell EL products to
the compliant business. What may be most significant in terms
of allowing regulators to target rogue employers is information
sharing between different agencies, particularly those of the
Government. If an employer has been found to be in breach of certain
laws and regulations, whether those are minimum wage rules, employing
illegal workers, traffic violations, black market activity, etc,
then they are also more likely to be running health and safety
risks. It is crucial that agencies such as the Police, HM Revenue
and Customs, Local Authorities, DVLA, Border & Immigration
Agency, Identity & Passport Service, etc, share information
that could help to locate and check on those businesses operating
at the margins of illegality.
86 HSE website. Back
Fenn, P., Vencappa, D., O'Brien, C., Diacon, S., Is there a "compensation
culture" in the UK? Trends in employer's liability claim
frequency and severity, Centre for Risk and Insurance Studies,
Improving health at work: employers attitudes to occupational
health, ABI research by Greenstreet Berman Ltd, October 2006 Back
Attending to Absence, CBI/AXA Survey 2007, page 26 Back
Attending to Absence, CBI/AXA Survey 2007, page 26 Back