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Premium-rate injuries

22nd February 2007
Page 40
Page 40, 22nd February 2007 — Premium-rate injuries
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Which of the following most accurately describes the problem?

I he NHS is coming after negligent employers' money — but how will

this affect insurance premiums?

John Davies reports.

Along-dormant provision in the Health and Social Care (Community Health and Standards) Act 2003 was re-activated on 29 January this year. The provision allows the NHS in England and Wales to recover the costs of treating anyone who is injured and successfully sues a negligent party for compensation. Equivalent steps are also being taken in Scotland.

For many years the NHS has been able to recover from insurers the costs of treating victims of road traffic accidents who have gone on to make successful claims for compensation. But this long-standing situation is now to be extended to cover a range of circumstances, including accidents in the workplace, as long as some party (most obviously the employer) is subsequently held to have acted negligently and is found liable to pay compensation to the injured party.

Take an injury incurred in the workplace by a member of the employer's staff. If the injury can be attributed to some form of negligence on the part of the employer, and the employee successfully sues his employer for compensation, the cost of any resulting NHS treatment can be claimed back by the NHS from the employer.

Similarly, if a client, customer or member of the public suffers an injury in or around the employer's premises which is subsequently held to be the responsibility of the employer, then once again the NHS is now entitled to recover the treatment costs. In both cases, the costs will ulti mately be met by the employer's insurance policies.The one caveat to this is that where the employer's policy has an upper limit on the amount of cover provided in a personal injury case (as opposed to a lower limit or excess figure), the insured party — the employer — will be liable for the remainder. So if,for example, the NHS claim is for £30,000 and the employer's cover is only worth £25.000, the employer will be responsible for the remaining £5,000 of the claim.

The greatest effect of this change is that businesses now stand to pay whether or not they have insurance.

However, any NHS claim will be capped at f37,100. So the most serious cases, such as longterm treatment for fractures or stress-related conditions, will not lead to an indeterminate liability. What's more any contributory negligence on the part of the injured employee or customer will be taken into account in attributing liability to the employer. So any business facing a claim is entitled to press for full acknowledgement of for example, any failure by an injured worker to wear protective equipment he had been directed to use.

But given that the cost of calling an ambulance is put by the government at £150 and daily hospital treatment at nearly £600, the costs will soon mount up. And remember that some employers will face not only the cost of paying compensation to the injured party, but also the cost of treating that party for their physical and possibly psychological injuries.

Take responsibilities seriously

The only answer for businesses is to ensure they take their health and safety responsibilities seriously, and do everything possible to mitigate the risk of their staff or customers incurring injuries that might give rise to medical treatment and compensation claims.

The insurance industry is making an effort to engage with the business community on these lines and insurers are prepared to reflect responsible business practices in their rates. To minimise their exposure to the inevitable general rises in premiums, businesses should be prepared, before their next renewal date, to conduct an audit of their health and safety proceduresThey should also review the proper functioning of all mechanical equipment and re-assess their operations for any possible weaknesses in materials, fabrics, training needs and premises maintenance.

'lime and expense incurred doing this, and documenting any improvements made, may prove worthwhile in the long run.s

John Davies is the head of business law at the Association of Chartered Certified Accountants (ACCA).


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