For many of us, the Covid-19 pandemic has changed working life in countless ways. From an improved work / life balance through working from home to increased mental health issues from extended isolation. Whatever the impact, the health and wellbeing of employees has jumped to the top of the list and personal accident insurance is proving a helpful and holistic solution for employers.
The construction industry has once again shown itself to be remarkably resilient in the face of the pandemic. After a brief period of rumination and reorganisation, the vast majority of projects were back up and running with Covid-19 safe procedures in place. Workforce wellbeing was, and continues to top the agenda, a welcome contrast to how this situation would have been managed a few decades ago.
Historically, construction companies have always focused on employers’ liability (EL) insurance. Perhaps unsurprisingly as it has been a compulsory class of insurance in the UK since 1972 following the implementation of the Employers’ Liability (Compulsory Insurance) Act 1969.
There are other reasons why EL insurance has had the attention of employers; in the past premium costs were always increasing due to the high incidence of injuries reported on projects as well as the ever escalating costs of both damages awards and claimants’ solicitor costs.
EL insurance protects an employer against its liability to employees for injury, disease or death caused during the course of employment. There is no automatic benefit and the employee must prove negligence or breach of statutory duty on the part of the employer for any damages to be awarded. It is a statutory requirement to protect employees’ compensation even though the employer may be insolvent.
How well does the system work?
Issues such as workplace noise induced hearing loss, hand/arm vibration syndrome and asbestos related conditions have been claimed and won in the past. Indemnified by the policy in force when the exposure occurred, these historical losses aggregated together and caused a number of insurer insolvencies among those who wrote this business in the second half of the last century. Some statutory protection applied for claims arising during the compulsory period (post 1972), but there have also been some unfortunate cases where claimants have gone uncompensated as both their employer and the insurer were insolvent.
This aside, any system that relies on proving negligence of either party will be adversarial and not conducive to good longer term relationships between employer and employee.
As both liability and loss must be proved, legal advisors are invariably involved, almost always to represent the claimant, and more commonly on the most serious cases for the employer. With the best will in the world, these advisors have a narrow brief to represent each side in relation to the claim, and this does not always consider any ongoing relationship once the claim has settled. As a result, a lot of time (and therefore money) is incurred in resolving liability and quantum issues, creating inefficiencies in the system. It is commonplace, for example, for solicitor costs associated to industrial disease claims to far outweigh the damages awarded to the claimant.
Personal accident insurance - an alternative approach?
It’s a well-used statement that employees are a company’s most valuable asset. It is strange, therefore, that these human assets are not insured in the same way a company’s property or other valuable owned and tangible assets are. One option to consider to remedy this is personal accident (PA) insurance.
PA insurance requires a different mind-set as the employer’s objective is to protect the employees themselves as opposed to just the company or its liabilities. Many companies will have purchased PA insurance in the past for specific reasons. For example, in the event that employees are injured or become ill when travelling on business, or perhaps where employees with existing contractual benefits are transferred into the company through TUPE legislation.
Policies have historically been structured to provide a pre-determined payment for injury as well as replacement of lost earnings, however it is becoming more common for businesses to adopt a holistic approach with regards to their PA purchasing.
How has PA insurance changed in response to demand?
In recent years, PA policies have evolved to include significant additional services that work in tandem with the duty of care an employer has for its employees. Most corporate PA programmes now include employee assistance and support services such as counselling, virtual GP appointments and medical second opinions, to name a few. They can also cover partners and children on the same policy.
In these uncertain times of lockdowns and the skills shortages facing the construction industry, it will be interesting to see if increased well-being concerns for employees will see companies look to a more holistic approach through the provision of PA insurance. The greater emphasis on wellbeing, manifested in part by the purchasing of PA cover for employees, is a key area where construction employers can differentiate themselves in the battle to attract and retain talent.