CLAIMSadvisor How to reduce the total cost of claims

CLAIMSadvisor
ENGINEERING & MANUFACTURING SUPPLEMMENT
SEPTEMBER 2013
Managing Employers’ Liability Risk
How to reduce the total cost of claims
The failure to guard against Employers’ Liability (EL) claims and have appropriate insurance
and protection in place can be extremely costly to an engineering and manufacturing company.
This bulletin looks at new regulations and how companies should be building their defence
against rising EL costs.
According to HSE statistics there were over 638,000 injuries in
the workplace in 2010 and 2011; half a million people were off
work due to illness and there was a fatality every two days.
Compensation for EL claims totalled over £1bn, with an average
settlement of £10,000, while sick pay added another £1bn to
the bill.
Meanwhile, EL claims are on the increase again after temporarily
dropping off between 2008 and 2010. Amidst a challenging
economic climate, the manufacturing sector accounted for 10%
of that total, so for hard pressed businesses in the UK it has
never been more important to avoid becoming another statistic.
Those responsible for risk management within the UK’s
manufacturing firms must now contend with the issues that
spark attritional claims as well as a number of emerging trends.
These include the everyday concerns - absence management,
maintaining a safe workplace, reducing accidents - to potentially
seismic changes in governing regimes or legislation such as the
deregulation of health and safety.
What is Root Cause analysis?
Companies are increasingly trying to understand their organisation
from a cultural perspective; asking some difficult questions in the
process. The process of root cause analysis can help give you
focus and improve in those areas, which will save you a lot of
money in claims.
Employees within manufacturing industries remain well
represented by trade unions so it is important to
engage them and your workforce to try and
address EL claims issues. Without that
cooperation the situation may
struggle to improve.
“Root cause analysis can help give you
focus and improve in those areas, which
will save you a lot of money in claims…”
Building your defences
One of the keys to tackling and defending claims is through
understanding your claims experience in a systematic way and
on a regular basis. Where are your claims happening? What
caused them? Are you managing to defend them already? If
so; why? If you are settling claims, what are the reasons and
are your systems holding up?
At the heart of any defence is the support of clear and
contemporaneous evidence. The importance of timely and
accurate reporting cannot be underestimated. An injury must
be assessed in a detailed and proportionate measure to the
incident. With everyday accidents this might mean a brief
accident book entry. At the opposite end of the scale, a severe
limb injury will necessitate a 20-page report and triage process.
Detailed accident reporting documentation has to be fit for
purpose. This could be one of the most important documents
when it comes to defending claims.
evidence can provide indisputable proof. Companies should
ensure they have adequate resources to investigate accidents.
CCTV evidence is becoming more and more important.
It may be there for security purposes but it may capture a lot
of accidents too. The question is what are your retention
strategies on CCTV evidence? Do you keep it for a day, a
week, did it capture an accident; do you analyse it? This sort
of evidence is incontrovertible.
For companies looking for a guide on what types of evidence
will work in their favour, you should look no further than
disclosure lists from solicitors. These are standard documents
and they outline all the things you will need to defend a claim,
helping you make sure all information goes into an accident
investigation report.
Maintaining the courtroom theme, accident reporting also has
to include the identification of key witnesses. Most people think
the key witnesses are only the people who actually saw the
incident, suggesting that if you didn’t see it then you’re not a
viable witness. In fact key witnesses could very well be people
who did not see the accident, but if their evidence is credible
and relevant; their testimony is important. The injured party is
also a key witness.
Indisputable Evidence
Interviewing witnesses is just one aspect of investigating the
accident though, on a practical level CCTV or photographic
“Key witnesses could very well be people
who did not see the accident, but if their
evidence is credible and relevant; their
testimony is important.”
Training essentials
Employee training programmes play a significant role in
defending claims. A training programme must be fully
aligned with HR processes and a training matrix to ensure staff
training is appropriate to their roles, once again with records
maintained so that they can stand up to scrutiny.
The focus of Lord Heseltine’s report in early 2013 was to
shift funding from Whitehall and send it directly to the regions.
Training is very important in defending claims because if you
haven’t shown your employees what to do and what you expect
from them then it is very difficult to say that they’ve done
something wrong. It is not enough to provide the training once;
you must carry out refreshers or risk a situation three or four
years down the line where a court finds your business negligent
for not having done so.
However, the government’s radical stance on deregulation
seems to have mellowed. Westminster is considering an
American model called the Voluntary Protection Plan. This is
where you as an organisation can go along to the regulator
and say; ‘this is how we are dealing with our risks’.
Alongside its training obligations, HR departments are also
obliged to manage absence, which is an area where employers
commonly fail to manage the value of the claim. Ensuring a
quick return to work and consideration of rehabilitation at day
one of an incident can result in far cheaper settlements on an EL
claim than would otherwise have been the case if an employee
was allowed to stay off work indefinitely.
Look beyond the horizon
Detail and transparency are at the heart of a successful claims
defensibility strategy and above all, manufacturers can benefit
from good relationships and interactions with their claims
handlers, insurers and adjusters. Good dialogue with those
professionals can provide valuable insight in assessing why
claims are being paid and what can be done to improve your
business’ exposure to losses.
Companies are also advised to learn as much as they can about
emerging risks that may face their industry or business sector.
We all know what we’ve got at the moment but there are new
types of claims coming along, with cancer-type claims starting
to emerge. For example, nano-fibre technology is being cited as
potentially the next asbestos. The fibres in nanotechnology are
very similar in length and we don’t really know yet whether they
will lead to claims.
Sometimes you need to take a backward step and think about
where your future exposures might lie.
Deregulation or Self-Regulation?
UK companies will need to be ready to regulate their own
health and safety standards as the Coalition Government
responds to recommendations from
Lord Heseltine.
The current thinking is this could result in a world where trade
associations become far more important, helping to manage
their members’ Health &Safety (H&S) standards.
The H&S regulator may be encouraged to take a hands-off
approach, only becoming involved if tragedy strikes and
concentrating its efforts where most needed. When you factor
in the 35% budget cuts that the HSE faces under the current
saving drives this approach makes sense. It could be that
those trade associations take over that role to hold members
to standards of H&S. One or two are already gearing up for this.
Ultimately manufacturers could benefit from the new regime.
Earned autonomy means you can’t just deregulate, you need
some autonomy that has been earned that the community
can trust.
“Companies are also
advised to learn as much
as they can about
emerging risks that may
face their industry or
business sector.”
Meeting the knowledge demand
JLT presented these issues at a recent
Employers’ Liability Seminar in Leeds, where an
audience of 50 risk managers from within the
manufacturing, engineering and consultancy
sectors heard from a trio of experts. Jon
Fitzsimmons, Claims Consultant with JLT
Specialty was joined by representatives from
Zurich Insurance Company and Irwin Mitchell to
provide insight into the challenges faced by
businesses. New practices, regulations and
legislation such as the civil justice reforms and
Enterprise Bill mean risk managers have to stay
well informed of developments in order to
manage their exposures.
Demand Different
At JLT Specialty, we believe in doing things differently.
Why? Because in the world of insurance broking, risk
management, claims consulting and settlements, the
only way we can develop solutions that really deliver is
to properly understand all the different challenges you
face. And we know the answer does exist, no matter
how difficult the question is.
Our success comes from focusing on sectors where
we know we can make the greatest difference. On using
insight, intelligence and imagination to provide expert advice
and robust – often unique – solutions. And on building partner
teams to work side-by-side with you,
our network and the market to deliver responses which
are carefully considered from all angles.
CLAIMSadvisor
And because of this, our clients trust us. They have total
confidence that the vital elements of their operations are
covered, enabling their businesses to be even more
ambitious and surpass expectations.
We know how we work makes us different.
It’s quite a claim but we’re driven to deliver on it
every single day.
JLT Specialty. Demand different.
For more information about the issues raised in
this bulletin, please contact:
Jon Fitzsimons
Tel:
+44 (0)20 7558 3240
Email: Jon_Fitzsimons@jltgroup.com
This newsletter is published for the benefit of clients and prospective clients of JLT Specialty Limited.
It is not legal advice and is intended only to highlight general issues relating to the subject matter which
may be of interest and does not necessarily deal with every important topic nor cover every aspect of
the topics with which it deals. If you intend to take any action or make any decision on the basis of
the content of this newsletter, you should first seek specific professional advice.
JLT Specialty Limited
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© August 2013 266914