Rob Withers questions whether insurers are practising what they preach when it comes to health and safety regulations.
Earlier this month, Post published an article on the challenges insurers face when covering risks on construction sites, particularly in connection with gangmasters and migrant workers (Post, 5 November 2009, pp19-20). The Health and Safety Executive gave the construction sector a ‘poor bill of health' for its high injury rates and there was much debate over how to address gangmaster issues and make working practices safer, especially with an increase in migrant workers, coupled with the communication and training difficulties this brings.
Those in construction were lambasted by Rita Donaghy, the former head of ACAS, for their ‘buccaneer' approach, but insurers countered that principal contractors do have robust policies in place for managing foreign labour. While insurers may be confident about their client's health and safety management, how confident are they of their own adherence to health and safety regulations?
While the insurance sector's figure for accidents is far lower than that in construction and gangmasters are not an issue because insurance forms a microcosm of the construction sector (where only 3% of workers are employed this way), I do believe some insurers are, perhaps unwittingly, contributing to the probability of an incident by using a supply chain process that positively encourages sub-contracting - the very thing the HSE is wary of.
In a bid to keep costs down and contractor panels to a minimum, the majority of insurers only use national organisations, building repair networks or larger regional contractors to manage claims, managed either through an intermediary or direct. With a reduced number of firms on panels and challenging service level agreements to uphold, contractors are coming under increasing pressure to meet clients' demands within certain timescales. As a result, they may feel compelled to sub-contract their work. When this happens, the insurer or ‘client' has less control over the health and safety management of their claim, and service levels may slip because a lower tier down the chain is responsible for delivery on the insurance promise.
Changes need to be made to the procurement system - and fast. The fewer contractors insurers engage with, the more likely their work will be sub-contracted out, leaving them less in control. This is contrary to the Construction Design and Management Regulations 2007.
The CDM regulations apply to insurance companies or their agents when appointing a contractor - directly or indirectly - to work on a claims project that exceeds 30 days. If there is an injury on site, the insurer will be liable and may face legal action.
CDM forces insurers to address, manage and communicate health and safety at the early stages of claims management, instead of later on when the onus is often on the contractor. A CDM co-ordinator has to be appointed (employed either in-house, via a loss adjuster, engineer or independently) to record all health and safety arrangements, site rules and any specific measures for construction work. This person must ensure all mandatory CDM forms are signed by the insurer, designer (structural or in-house engineer) and principal contractors. If work is sub-contracted, the secondary firm must sign as well.
Supply chain responsibility
Insurers have a responsibility to check the competency and resources of all appointees and have a process in place to ensure repair work complies with CDM 2007. Given the demands of these mandatory regulations, I wonder how many insurers are confident their supply-chain processes comply?
Those working with SMEs, which tend to directly employ their workforce, have a greater degree of control both in the management of health and safety and delivery of their service levels. I appreciate the need to keep costs down, but there is a balancing act to be struck. So I ask insurers the very question they ask their clients: what cost do you put on peace of mind?
Having reminded the sector of its mandatory obligations, I encourage insurers to audit the processes currently underway in their own backyard; it is as important to keep abreast of recent HSE developments for themselves as for their construction clients. For example, are all insurers aware of HSE changes to mini-piling rigs and buried services?
The HSE recently reinforced its stance on the use of mini-piling rigs having guards around the auger heads (drilling sections). Previously, it was acceptable to have a system of trip wires to stop the rotation of the rig and so prevent a major accident. But this is now not seen as sufficient and the whole of the auger section of a mini-rig needs interlocking guards so that no operative can work in the area of the augers when they are rotating.
This challenges existing working practices and means, in effect, a 25% to 30% reduction in production because each time an auger is approached, the rig must be stopped and guards opened. In a 10m deep pile, this means 10 stops as the augers are usually 1m in length.
Although all members of the Association of Specialist Underpinning Contractors have fixed guards on their machines, or are in the process of doing so, insurers appear happy to appoint non-compliant contractors, swayed by cheaper production costs and faster timescales. I'm aware of a number of HSE prohibition notices that have been issued to contractors for non-compliance.
The HSE also issues a guidance document on services - HSG47 - which states the employer (in this case, the insurer) is responsible for identifying buried services, such as gas and water mains, telephone cables and fibres optics via the procurement of plans. Prior to any works commencing, the insurer must pass plans to the contractor, who has to be familiar with the site's service layout in order to work around them. On a subsidence claim, this should be carried out before any trial holes are dug. But, with these types of claims being so price-sensitive, insurers' supply-chain guidelines appear to promote the use of sub-contracting, which may result in contractors further down the chain not receiving vital service information. So, what started off as a money-saving exercise could cost the insurer dearly if accidents involve a number of service providers - not to mention the maiming or killing of an operative.
I agree the issues surrounding gangmasters need addressing, but so too do the health and safety issues currently on insurers' doorsteps. The industry is quick to insist its construction clients adhere to certain health and safety practices when selling liability covers, but I fear they do not adhere to their own advice when it comes to supply-chain processes and contractor management.
Rob Withers is managing director of the Withers Group
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