Do you have the proof to defend claims?
Each day, UK insurers pay out more than £7.5 million in general liability claims. Figures from the Compensation Recovery Unit (CRU) show that the annual number of claims of which it is notified has risen 18 per cent in the past three years, to 861,325. There may be some debate over the rise of a compensation culture but there is no doubt that society is increasingly litigious.
When a claim is brought against an organisation, there will always be a cost - much higher of course if the claim is successful. Organisations with an eye on the bottom line must take every step possible to ensure they do not end up being forced to pay a claim unnecessarily. In fact, for organisations that are increasingly focused on social responsibility, it represents good governance and corporate citizenship to ensure the business does not end up being liable for a claim.
All organisations have health and safety policies in place, but in this environment businesses must go much further. To defend any claim successfully, they need the appropriate paperwork, processes and procedures in place to prove they have taken all the right steps. Each business must ask itself whether it has the ability to prove, for example, that health and safety risk management processes are being implemented, and whether it has the paper trail to demonstrate that every stage of the process has been carried out.
Health and safety paper trail
It is worth revisiting health and safety paperwork to ensure it is robust and effective. This will include asking whether it is properly completed for every incident, with the right details and signatures. Jon Fitzsimons, a Claims Consultant with Echelon Claims Consultants, says: "If you produce the accident form but have not got the employee to sign to state that this is an accurate reflection of the incident, then it is often not worth the paper it is written on.” It is important to consider whether the paperwork is effective. Fitzsimons says: “Consider, for example, the accident reporting form. It is common to include a box for suggestions on how to avoid that sort of incident happening again, but what happens to those suggestions? Can you prove they are acted on, or do they just sit in a dusty file somewhere? Comments here can also prejudice the ability to defend claims so you may need to separate this part of the report out as a distinct process dealt with by someone more senior within the organisation.”
Training and HR
Human resources processes is another area that merits thorough scrutiny. It is worth breaking down induction and training to make sure there are no gaps in training and that employees are learning the right things at the right time. As well as looking at operational management, it is important to check that the HR paper trail is watertight. Even the recruitment process must be considered. For example, does the job application form contain a question to allow for early identification of those who may be more susceptible to injury, to ensure they have the right support and working conditions? Risk management also means putting broader health and wellbeing support under the microscope. An organisation may have a workplace health professional, or run confidential schemes such as a stress helpline. While the privacy of employees must be respected, it is vital to assess how these are being used, whether they are effective and whether they are demonstrably providing support for employees.
The environment
The working environment should also be considered, including the building and the activities of employees. It is important to weigh up not just whether legislation is being properly adhered to, but also that inspection and maintenance documentation is of the highest standard.
Finally, it is worth examining the organisation’s claims experience to better appreciate how and why claims are arising and what can be done to reduce their number and cost. There may well be patterns within the claims that can help identify whether a change in working conditions, processes or documentation would help avoid a claim or improve the chances of successfully defending one in future. An in-depth investigation requires attention and resources and it is worth analysing not only claims, but near misses and notifications. However, front-loading the process is simpler and more cost-effective than if a failure causes a major incident, so it is well worth addressing before it is too late.
This article was originally published in the November 2010 edition of Risk Specialist. A publication devoted toinsurance and risk management for large and international companies.
