Author: Richard Hartley, 23 April 2008.
Business insurance broker Alan Boswell Group is warning firms not to ignore the implications of the recent Corporate Manslaughter Act. Appropriate protection and risk management advice is available in the business insurance market but the broker claims that many small and medium-sized firms may be unaware of this. The Corporate Manslaughter and Corporate Homicide Act 2007, which came into force on 6th April 2008, makes it easier to bring legal action against organisations and heightens the exposure of
directors and officers. Companies now face a criminal offence and larger fines if they are found to have caused death due to their gross corporate health and safety failures.
Business insurance protection
Whilst the change does not require organisations or businesses to comply with new regulatory standards, it will focus attention on safety issues and ensure
health and safety obligations are taken seriously. Aside from adopting robust
risk management and
health and safety procedures, companies can also arrange
business insurance policies to help protect them (and their
directors and officers) against legal action or investigations.
David Tuttle, head of Alan Boswell Group
business insurance division, points out that
directors and officers liability cover (or
D & O as it is commonly known) is now more competitively priced than ever: "Competition between insurers and wider availability of
D & O insurance has pushed rates down so this kind of protection is now within the reach of even the smallest firms."
D & O insurance was originally designed to protect the individual officials within the organisation rather than the legal entity they work for. Some insurers already provide some indemnity for the Company (entity cover) within their D&O policies and are responding to the Corporate Manslaughter Act by adding additional protection.
Tuttle explains: "Ace European has introduced a new extension to its
D & O insurance which provides £1 Million of cover for wrongful acts alleged to have been committed by the company. The policy will also pick up legal expenses incurred in dealing with any official investigations relating to corporate manslaughter, corporate homicide or health and safety matters."
A further measure in the new Act will require organisations to publish details of their convictions. The extended Ace
D & O insurance will pay towards PR expenses incurred in any damage limitation exercise undertaken to counter negative publicity arising from a prosecution under the Act.
Review health and safety
Tuttle stresses that such cover should be seen very much as a last line of defence and he is keen to emphasise the importance of proactive
risk management: "We urge our
business insurance clients to review their
health and safety management systems regularly and make use of our in-house
risk management services or those available from insurers. It’s in everyone’s interests to ensure that the there are as few claims as possible."
In conjunction with the Institute of Directors, the Health and Safety Executive (HSE) has published guidance for directors on responsibilities for health and safety. The booklet entitled "
Leading health and safety at work: leadership actions for directors and board members" contains valuable information for business leaders.
For further advice and a quotation for
directors and officers insurance - or any
business insurance requirement - complete the
enquiry form,
email us or phone us on 01603 218000.
Alan Boswell Insurance Brokers Limited, Alan Boswell Insurance Services Limited and Alan Boswell & Company Limited are authorised and regulated by the
Financial Services Authority.
