Companies should adopt a healthy approach to insurance

What do employers and health and safety managers need to know about employer liability insurance? What should they look out for in an insurance policy? What should they be wary of? What does the schedule mean and how do they arrange their excess levels or "deductibles" - the amount of risk they can run with themselves?

According to Mr Michael Kelly, risk and insurance manager at Eircom, companies should get to know their insurer and the people in their insurance company who make the decisions. "They should have confidence in you and you in them," he says.

Employers and health and safety managers need to know what a conventional insurance programme is and what are the factors that drive it: market cycles, competition, market capacity and claims experience, ie claims against you. The company's attitude to risk management practices like safety awareness, claims administration and accident management is also important, he says.

"Look at the schedule, there's a schedule in every policy. That would tell you who exactly is insured and what they're insured for. It should be spelled out in black and white. The period of insurance is very important. Is it 12 months, two years?

"And things like the precise type of work or services covered in the policy. People have this `Oh, yeah, we're all covered' but you're not until you see it in the small print. Check everything and seek advice if in doubt.

"What is the sum insured? What is your limit of indemnity? And things like the territorial limits - now that's very important for, say, a large company like us which would have subsidiaries abroad - these should all be spelt out in the schedule," says Mr Kelly.

A lot of people don't appreciate what is required of them vis-a-vis "disclosure" in a policy, he says. "Each party has a duty to observe good faith and you can't wilfully mislead each other or perform a fraudulent act.

"An example of that would be if somebody wanted to upgrade their production line over the weekend and they know the risk of breakdown might be higher. You should tell your insurers about that. And generally speaking there is a duty on people, on companies and safety people to tell the insurer if the risk is going to be increased during a particular period.

"Then you have things like material facts. Now a material fact is something that would influence the judgment of the insurer deciding whether he wants to accept the risk and what premium to charge. In other words, if the material fact changes, you should tell your insurer . . . You're obliged to put everything on the table so the insurer knows because surprises at the end of the day cost everybody money."

Employers and safety managers need to grasp what exclusions and extensions are in a policy cover. For instance, deliberate acts of pollution might be excluded or the policy could be extended to include breaches of health and safety or data protection legislation.

If anybody taking out an insurance policy is in any doubt, they should seek professional advice, probably from a broker, he says.

On the administration of claims, the quicker you handle them, the cheaper they are for yourself. "When you establish without any doubt that liability of the claimant is not at issue, then you should attempt to reach a settlement quickly to deflect the high cost of legal proceedings, which can be up to 30 per cent of settlement. Alternatively, where you're not liable then, in my view, you should aggressively contest the claim all the way, right down to the courts if necessary," he says.

Employers should consider new risks such as stress, trauma and electro-magnetic fields and collect health and safety statistics for their company. Substantial savings can be achieved by assessing and controlling all risks involved and by keeping special records on all accidents and incidents that occur in the workplace.

Liability insurance costs closely reflect the claims history in a company and the answer to controlling these kind of costs lies with management, he says.

Mr Kelly will speak about insurance management at a conference on the economics of safety organised by Health and Safety Review at the Doyle Green Isle Hotel on May 25th. Other speakers will address absence management and accident investigation. For further details, telephone 01 4972711.

jmarms@irish-times.ie