presented by - bsi group...aviva risk management solutions presents compliance in a recession...

Aviva Risk Management Solutions

Presents

Compliance in a Recession

Presented by

David Graves

Consultant

Introduction

Who we are

What we do

Some statistics

© Aviva Nov 2009

Compliance in a recession

Who we are

Aviva is the world’s fifth-largest insurance group. It has:

– 57,000 employees (of which 34,000 are in the UK)

serving 45 million customers worldwide, and £364 billion of assets under management.

Aviva is the UK’s largest insurer with approx 15% UK market share. We provide:

– Life, pensions and investment products

– General insurance products

– Motoring and insurance services via the RAC

© Aviva Nov 2009


What we do

• Aviva Risk management Solutions is the specialist division of Aviva that is dedicated to helping UK businesses manage their risks in an effective way.

• Services:• Advice and support products and services• Assessment, audit & testing services• Consultancy services

• Environmental services • Helpline• Training services

© Aviva Nov 2009


Insurance Industry and Health and Safety

Main industry interaction with health and

safety is through insurance of liabilities

• Employer’s Liability (compulsory)

• Public Liability

• Products Liability

• Motor Insurance (private and fleet)

– Third party liability compulsory

© Aviva Nov 2009


Fatal Accidents

• Note:

– HSE Figures using RIDDOR definitions

– 2008 – 09 figures provisional

– Over the last five years the UK has consistently had the lowest fatal accident rate in Europe

© Aviva Nov 2009


Non-Fatal Injuries

© Aviva Nov 2009


Prosecutions and Enforcement2007-2008

HSE

• Prosecutions*

• Enforcement notices

Local Authority

• Prosecutions

• Enforcement notices

Total

• Prosecutions

• Enforcement notices*Approx 80% prosecutions

successful

1,028

7,740

334

6,010

1,362

13,750

© Aviva Nov 2009


Insurance Industry Personal Injury Claims 2000-2004*

Year Accident Disease Total

2000-1 612,120 123,814 743,593

2001-2 614,092 74,048 688,691

2002-3 615,564 91,151 706,715

2003-4 557,186 213,057 770,243

* Source Datamonitor

No actual figures available to us for later years but EL claims were at a 5 year low in 05/06 with costs said to be down 9.4 %

How Insurers Can Influence

Health and Safety

Based on Aviva experience

© Aviva Nov 2009


Overview

• High level contacts

• Underwriting and intermediaries

• Face to face contact with insured

– Claims

– Risk advice

• Advice and guidance

Recession Effects

© Aviva Nov 2009


Employer’s Liability

Stress

Redeployment of Labour

Staff ReductionsAdditional Business Activities

TrainingMalicious Claims

Budget cuts affect on Risk Management

Reduced

Maintenance

“Try-ons”

© Aviva Nov 2009


Public & Products Liability

Unoccupied Property

Sale of unused equipment / machinery

Fraud & Malicious Claims

Contract Terms

Outsourcing of manufacture & Quality

Control

Training

Reduced Maintenance

© Aviva Nov 2009


Case StudiesPotential Claims

How might the recession might lead to more or different claims?

Liability Claim - 1

A firm may be tempted to undertake work that is outside its declared

business description or normal working practices. For example, a small

builder could take on a contract which involves a susbtantial element of

demolition.

Whilst the policy provides cover for work undertaken in connection with a

building project (up to 4 metres) the taking on of a larger project could

result in a significant increase in risk for the firm/employees arising from a

lack of specialist equipment and requiring employees to carry out work for

which they are not trained or competent.

© Aviva Nov 2009


…Liability Claim

An employee is asked to carry out work that is outside their normal scope

of duty.

It is easy to conceive of a situation where an worker who is employed as

a printer or to operate a plastic injection moulding machine is asked to

carry out building maintenance on the the fim’s premises because orders

are down and they have time on their hands.

Case StudiesPotential Claims

© Aviva Nov 2009


Case Study – Roof Fall

• A slaughterman was asked to clean moss

from the roof/gutters at his workplace

• The indivdual, aged 36 fell whilst doing so

• Injuries - 2 crushed vertebrae and a

fractured wrist. • Prognosis is unclear at present but we

expect that the current reserve of

£165,000 will increase.

© Aviva Nov 2009


Case Study – Road Accident

• 2 employees left Leeds at 4.00am, having got up at 3.00am, and shared driving to Norfolk, arriving at 7.00am to commence work on site at a local holiday village.

• 4.40pm they drove to their overnight accommodation and said they went to bed no later than 10.00pm. (At this time they would have been awake for 19 hours)

• Next day - set off for the site at 7.00am with no breakfast completed the job at 2.30pm and set off home.

© Aviva Nov 2009


• After about 1 hour the driver fell asleep, the vehicle left

the main road, went down an embankment and through trees.

• The passenger suffered a fractured spine and has had to

undergo a spinal fusion. Estimate £390k.

• Cumulative hours of driving, work the previous day and driver fatigue played a significant part in this accident.

• We think that fewer employees available to carry out

the work and other financial pressures also contributed to this accident

Case Study – Road Accident

© Aviva Nov 2009


Case Study – Empty Property

• Property is a disused cinema

• Criminals entered the building, ripped fire hose off wall and left water running for several hours. Extensive water damage throughout the property. Claim £780,000.

• Owner failed to:– turn water off at the mains

– chain or lock the isolation valve

– or keep a record of any property inspections.

• Whilst for Aviva this is a property claim, potential for injuries from inadequately protected unoccupied properties is high.

• Lack of basic precautions by insured could lead to repudiation of claim

© Aviva Nov 2009


Case Studies – Fraud

• We are seeing a lot more cases like the following;– Claim reported for theft of furniture allegedly left in a

property that could not be let.

– Insured tried to prove loss by suggesting that indentations in carpet were proof of furniture being present prior to theft occurring.

– We checked with previous tenant who was able to match indentations precisely with their furniture!

– Another insured reported theft of two ice cream vans, in full knowledge they had been taken by bailiffs!

In Conclusion

How can we help to counter

problems created by recession?

© Aviva Nov 2009


Precautionary Measures

• Downsizing/Redundancy

– Change control

• Identify duties of leavers

• Ensure re-allocation of essential roles to adequately skilled and trained personnel

• Don’t overload those remaining

• Guard against “job creep”

– Outsourcing/Contractors

• Maintain controls and competency checks

© Aviva Nov 2009


Precautionary Measures

• Buildings/Machinery

– Maintenance

• Identify and continue essential maintenance

– Unoccupied buildings

• Secure properties and remove external

plant/equipment

• Isolate and securely lock off all building services

• Arrange for regular inspections

• Risk assessment reviews, especially lone working and fire safety

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