15

PrintPrint
FeedTwitterLinkedin

Corporate Manslaughter Bill could lead to shake up of insurance coverage

  • Businesses will need to check extent of liability cover

The new Corporate Manslaughter and Corporate Homicide Bill should lead to a review of Employers Liability and Public Liability (EL/PL) insurance policies, says Reynolds Porter Chamberlain LLP (RPC), the leading insurance law firm.

The Bill received its second Commons reading on 10th October. It is currently passing through the Committee stage, which ends on 31st October, and is proceeding towards the statute book.

The Home Office has predicted an increase from the current figure of around one prosecution a year up to 10 to 13 cases a year when the Bill becomes law. Whilst this estimate in itself is not a dramatically high figure, this should not be cause for complacency.

The frequency and intensity of investigations will increase many times above this number. Whilst these will not necessarily lead to prosecutions, they will entail time and expense. Companies and insurers will need to check whether they are comfortable with the new level of financial risk the law will bring.

Nick McMahon, Partner in RPC's Health & Safety team says: "Without the option of jail sentences under this legislation, there might be a greater tendency for courts to impose severe fines, which are potentially unlimited under the new Bill. Add in the potentially significant legal defence costs involved in these kinds of cases, and the possible cost to businesses and their insurers increases even further. You can see why both insurers and insureds will want to look again at existing insurance cover and health and safety procedures."

"The provisions introduced by the Bill will make it easier to charge a company with corporate manslaughter than in the case of common law corporate manslaughter. Under the Bill management failure at senior level, where there has been a gross breach of a duty of care owed to the deceased, is enough to hold the company responsible."

RPC points out that some policy wordings might not cover the costs of defence representation for statutory corporate manslaughter proceedings or investigations at all. Some policies that do are limited to costs included in summary proceedings, and will not include the costs of Crown Court trials or appeals. Of course, it is not possible to insure against the cost of fines themselves.

Although some industries carry more risk than others when it comes to corporate manslaughter - such as construction and railways, or healthcare providers - all companies should ensure they have an adequate health and safety regime in place when the Bill becomes law.

Nick McMahon adds: "The Bill is likely to be passed by July next year. It is important to have appropriate health and safety policies in place because the Bill actually states juries can consider whether "attitudes, policies, systems or accepted practices within the organisation" are likely to contribute to a failure to comply with the relevant legislation."

ENDS

Press enquiries

Nick McMahon
Partner
Reynolds Porter Chamberlain LLP
020 3060 6000

Oliver Handy
Solicitor
Reynolds Porter Chamberlain LLP
020 3060 6000

Steve Rudaini or Nick Mattison
Mattison Public Relations
020 7645 3636