A new trend resulting from recent health and safety legislation changes could see the insurance industry being stung too, according to an occupational safety consultant.
Brent Sutton, principal at Safety Associates, told attendees at last week’s ANZI
IF Insurance Conference that while the nature of hazards and risk hadn’t changed, the new legislation had prompted greater prosecution activity.
A trend had emerged where entire supply chains were being prosecuted, and Sutton said insurance companies could find themselves being implicated too.
However, with the industry currently suffering from what he called ‘low risk syndrome’, that factor was being overlooked.
“You perceive your business as being a low risk business,” Sutton said. “And that perception is not based on good due diligence, it’s based on assumptions. It’s not based on fact.”
He said part of the issue was the way the industry looked at it.
“You look at it from a point of view of how you operate your business rather than how you form part of a supply chain or a contract chain with other providers.
“And while the activities that you undertake may not be considered to be hazardous or dangerous, the activities that are undertaken on your behalf are.”
The key issue with the recent legislation changes weren’t that the nature of hazards or risks had altered, but the attitude to prosecution had, Sutton said.
He cited the case of a young waste worker who died when the truck she was in went over a cliff in Birkenhead, Auckland last year.
The waste company, the vehicle maintenance company, the fleet leasing company and the council had all been charged, he said.
“They’ve all been charged for that offending, which was under the old legislation, and that will certainly create an interesting situation going forward because many people believe that this notion of overlapping or shared duties under the Health & Safety Act is fresh and new.
“Also fascinating is that the police themselves are becoming much more active in prosecuting under the Health & Safety legislation as well, and their approach is completely different to the approach of the land-based regulator WorkSafe in that area.”
Sutton said it was vital that the insurance industry understood their risk in the supply chain or contract chain they were involved in.
“It’s the number one priority I believe, because it’s going to be the actions of those individuals down the path that will basically create the risk to you.
“The new Act is clear, where you engage with other organisations who are sole traders, they are your worker, and as your worker you have a duty to provide the same levels of protection under the Act that would be for an employee in that regard.”
Sutton said there had been an expectation of a lead in period following the changes to the Act, but his first case occurred the day after the law changed.
Four months in, he had 12 active cases open and Safety Associates was running at 2.5 times its normal capacity on enforcement matters.
He said there were many inconsistencies of application around the new Act and where he had once been able to predict the likely outcome within a 15-20% range, that was not possible now.
“The problem we’re facing is that the ball game has changed but no one knows what the new playing field looks like at the moment,” he said.
But what was evident was that WorkSafe was ‘into prosecutions’.
“Last year they achieved a 91% success rate with prosecutions, so when they decide to prosecute they want to do it on the basis of getting a good outcome, and the 9% they lose, they’re losing to quite a small group of trial-based lawyers who are people who know how to operate in that space.”
Sutton said because WorkSafe had made changes to the types of events they wanted to know about, the key question was now ‘how do I know when I’ve done enough?’
“The old notion was tell us about things that relate to the nature of harm that is caused, now there’s a huge focus on tell us about things that could have hurt someone, and as a result we’re looking at 8-9 times the number of notifiable events,” he said.
“We need to think about how we’re going to approach this changing path so not only dealing with your clients, but also thinking about how you fit within the supply chain as well.
“More importantly, this is becoming the key question: how do I know when I’ve done enough?”
Brent Sutton helps to answer this question in the next issue of Insurance Business.
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