New workplace accident scheme could cost firms £43.7 million

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New laws designed to recover the estimated £44 million annual cost of investigating workplace accidents could cost Scottish businesses thousands of pounds, according to Central Insurance, Scotland’s largest independent commercial insurance broker.

Central Insurance said the Health and Safety Executive’s new cost recovery rules underlined the need for Scottish companies to put in place comprehensive risk management processes.

Under the current regime, businesses and directors can be fined by HSE following a breach of health and safety rules. From October, HSE will also levy costs onto those bills to fill the financial gap left after government funding cuts.

Scottish workplace injuries totalled 780 in 2010/11, with 15 fatalities. Most of these occurred in the agriculture, construction and waste and recycling sectors.

In Scotland, the HSE and local authorities investigate incidents and pass them to the Crown Office and Prosecutor Fiscal Service; the latest figures show a total of 45 offences were prosecuted, all of them successfully. Total fines against ‘duty holders’ – ie company directors – were more than £2 million.

Martin Gray, risk manager at Central Insurance, said: “HSE has the same problem as other government bodies in that it has to find ways to provide the same service with a smaller budget, and these new laws form part of how it’s planning to do that.

“The bad news for companies which breach the rules is they will need to pick up the tab for the HSE’s costs, which could run into tens of thousands of pounds in some bigger cases.

“The majority of businesses do work very hard at making sure they provide a safe workplace, but it’s a fact of life that accidents happen so it’s very important to try to keep the odds in your favour.”

While actual fees will vary depending on the complexity of individual cases, the cost applied for time spent by HSE staff has been set at £124 per hour. In addition, the potential costs for specific intervention activity have been estimated at:

  • inspection resulting in a letter approximately £750
  • inspection resulting in an enforcement notice approximately £1500
  • full investigations ranging from approximately £750 to, in extreme cases, tens of thousands of pounds

Costs will be recovered from the start of the intervention where a breach has been identified until HSE intervention is no longer required and the issue has been resolved.

Martin Gray said many companies incorrectly assumed the additional costs would be covered by existing insurance policies. However, he emphasised that insurers would not assist with any costs associated with the HSE’s cost recovery scheme.

He added: “The key thing is for all organisations to make sure their health and safety processes are up to scratch and in line with current best practice. Health and safety has a reputation for being massively onerous, but most of it is just common sense, doesn’t take long to implement, and will cost far less in the long run compared to an investigation and fines from the HSE.”

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