Insurance might be boring – but it protects us from exploitation

By Jamie Henley

As a trade union lawyer, who regularly deals with issues affecting those suffering from industrial diseases, it was a privilege at the National Policy Forum last weekend to add my support to the call for the establishment of an Employers’ Liability Insurance Bureau – I know what you’re thinking, and I know this sounds a bit dry, but please stick with this – it is really important!

There are two main types of legally compulsory insurance; they are compulsory because they both seek to insure against activities (driving and employing someone) where the insured risks not only their own safety, but that of a third party.

When comparing the two, it can be seen that motor vehicles account for approximately 3,000 deaths a year. An average of 230 workers are killed through injuries in the workplace and anywhere up to 24,000 are estimated to be killed by occupationally caused diseases, of which most are cancers (the largest single cause of occupational death is asbestos which is believed to be responsible for an estimated 4,000 deaths each year).

The message from Government about the requirement to hold such insurance is both clear and welcome – all motorists are required to have in force an insurance policy that covers them for liability for injuries to other people or their property caused while the vehicle is in a public place. Drivers without valid insurance can have their cars seized at the touch of a button upon search of the Motor Insurance Database, and also be prosecuted.

Employers are required to insure against liability for injury or disease to their employees arising out of the employer’s negligence. The policy cover must be for at least £5 million and any employer who does not have valid insurance in force can be fined up to £2,500 each day.

The Motor Insurers Bureau was established in 1946 and essentially acts as an insurance fund of last resort where no insurance exists, or where a policy cannot be traced, following a road traffic accident.

Sadly, there is no equivalent body to cover claims made arising out of an Employers Liability policy. If insurance cannot be traced, or if there is no insurer, then the claim automatically fails unless the victim can sue the employer for damages. In my experience and in the reality of legal practice, this really means that in disease cases, where the length of time between work and onset of symptoms is so great, a very significant number of cases fail because the employer is insolvent / no longer trading / cannot itself be found.

The Association of British Insurers is in effect self-regulated on this issue, with a Voluntary Code, called the ELCOP. Just before Christmas last year the DWP published the Code’s results for 2006-2007. The overall success rate was 35%, with the success rate for searches of policies after 1972 (when it became compulsory for employers to have insurance) at 39% and most worrying of all, the report shows a success rate of only 41% for the post-1999 searches. This is significant because insurers had previously undertaken to record all post 1999 policies in an easily searchable format. In his forward to the report, Lord McKenzie said: “there are still some 6,000 cases a year where these traces fail to produce a successful result”. What is perhaps not widely appreciated is that the success rate appears to be falling, with the highest success rate achieved being in the review year 2001-2 (when it reached 41%) and this, despite the ABI’s attempts to improve it.

There is, in my mind, no logic to the failure to compel the ABI to operate an ELIB scheme. The legal requirement on the insurance industry to operate the MIB scheme, is that the statutory obligation to have insurance against a road traffic accident creates what might best be described as ‘a captive market’ for the insurance industry. It therefore receives far more business than it would otherwise get. This of course is also true in respect of EL policies.

The All Party Parliamentary Group on Occupational Health and Safety recently reported that many of the traces made to the ABI were on behalf of the victims of asbestos-related diseases. Whilst separate records are kept by the ABI on the number of enquiries relating to mesothelioma, of the 1,047 enquiries between April 2007 and December 2007, again 35% were successfully traced leaving 679 unsuccessful enquiries in a nine month period. These people will have died without compensation.

In an attempt at impartiality, I am willing to accept that the ABI might be doing all it can to improve trace rates, I am told that they have increased staffing resources to this task. The reality for the victim however, is that the system has not improved and nor is it likely to. One cannot escape from the fact that many records are not available from the insurance companies, either because the employer was not insured, the records have been destroyed, or the employer operated under a different name from that on the insurance certificate. Attempts are being made to deal with this problem with methods which are, despite any good intention, bound not to succeed.

If the victims are the true concern, then an ELIB really is the only fail safe.

Given what we know is the high compliance by employers of the requirement to have employers’ liability insurance, the insurance industry has already received the premiums of the employers of almost all of the people who are unable to trace their employer’s insurance. The only reason that they cannot receive compensation is failings in the system of keeping or accessing information. If a system can be put in place to cover all 26 million vehicles on our roads then surely something similar could not be established for the employers’ liability compulsory insurance policies of the 1.2 million UK businesses with employees.