As the corporate manslaughter bill makes its way through its committee stages, lawyers are warning companies to check their liability insurance.
Insurance law firm Reynolds Porter Chamberlain (RPC) says that once it becomes law the bill will have implications for employers’ liability and public liability insurance.
Although the Home Office’s expectations of a rise from one to between ten and 13 prosecutions a year is not a dramatically high figure, this does not include the number of investigations.
RPC points out that even when they don’t lead to prosecutions, investigations they will entail time and expense. In addition, the bill opens up companies to a greater level of financial risk.
Nick McMahon, partner in RPC’s health and 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.
And some policies that do cover costs are limited to summary proceedings, not indictable, and so 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.
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.”