liability insurance affected by the new work act

Liability Insurance & The New Health and Safety at Work Act 2015

The Health and Safety in Work Act was passed by Parliament in August 2015. Health and safety is an issue that impacts virtually all companies and organisations in New Zealand and the Act has the potential to bring about some big changes.

Context, why has the new Act has been brought in?

From 2008 – 2013 Worksafe statistics show that there have been:

  • 133,887 severe injuries (1 in every 100 employees)
  • 1,160,786 non-severe injuries (1 in every 10 employees)

The new Act is similar to legislation in Australia which has been successful in reducing workplace injuries and therefore the conclusion has been drawn that it could have the same effect in New Zealand..

Some of the main changes

liability-insurance-affected-by-health-and-safety-act

1)  The concept of a PCBU (Person conducting business or undertaking) is wider than just an employer to employee relationship.

2)  The definition of a worker now includes employee, contractor / subcontractor, labour hire, homeworker / remote worker, apprentice, work experience, volunteers and other PCBUs.

3)  There is a new threshold where there is a presumption in favour of safety ahead of cost unless the cost is grossly disproportionate to the risk.

4)   Directors / Governance have an obligation to do due diligence in respect of Health and Safety.

5)   Penalties have increased by 6 times from the previous Act.

6)   Greater enforcement powers.

7)   Greater worker engagement.

Practical Points: What will you have to do?

1)   Have documented Health and Safety procedures. A few examples of what they need to address include:

  • Risk and hazard identification and minimization of these to your workers. Can you or your workers do something to reduce the risks of injury?
  • What happens if there is an injury? Response, reporting, notification to work safe
  • Communication with other PCBUs – if you work with other companies how do they communicate their safety procedures to you?
  • Worker engagement – how are you going to involve your workers?

2)   Communicate with your employees – with more evidence than purely a conversation (e.g. email or signed attendance at training)

3)   Use this opportunity to think about risks in general that impact on your firm and how you manage them. For example:

  • What would be the impact of losing your largest client?
  • What if you lost your best employee?
  • Making an error in your work.
  • Succession planning.

What insurance do I need?

A Statutory Liability policy.

This policy covers you for the cost to defend such a regulatory action and the cost of fines for offences under various Acts of Parliament. For Health and Safety however the Act does not allow insurance to cover fines, but can cover defence costs and reparations that are awarded to the individual injured.

Businesses should consider whether they want to purchase a statutory liability policy or whether they’d like to increase the limit of indemnity they have cover for.

Disclaimer: There are other factors and policy exclusions that may influence whether a claim is covered by a policy or not. Policy coverage will solely be determined by the policy documents and policy wording, and no reliance can be placed on the content of this blog post whatsoever. The content and examples of this blog post are only given to provide a general understanding or to help explain a specific concept.

 

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