Regulation - health & safety: Safe from harm

It is not a boast that is often made these days, but Britain leads the world on health and safety — its accident statistics being the lowest, with its safety strategies copied by many other nations.

And yet health and safety is often seen as a byword for rule-bound, killjoy, bureaucracy. The Health & Safety Executive's website has a long list of 'elf and safety' myths: graduates told not to throw mortar boards; poles in fire stations banned; regulations meaning trapeze artists would have to wear hard hats; and snowball-throwing deemed too dangerous.

Like conkers and goggles, these stories often have a grain of truth. A well-meaning but misguided headteacher did once tell pupils to wear safety goggles when playing conkers. The myth is that the HSE, the non-departmental public body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare in the UK, is behind such rules.

Despite the UK's enviable H&S record, the new government has instructed Lord Young to complete a root and branch review of the health and safety system in the UK with a view to cutting red tape for businesses and ending the culture of 'tick-box' regulation. His initial proposals were unveiled at last week's Conservative party conference in Birmingham. So, what will this mean for insurers and their clients?

The link between insurance, inspection and H&S is a longstanding one. In the mid-19th century, long before there was H&S legislation in the UK, engineering insurers insisted on inspecting the insured's hazardous plant, particularly their steam boilers, for the simple reason that they had the unfortunate habit of blowing up on a regular basis. Many people were killed and factories destroyed, which did not represent a very good insurance risk.

Complementary development

In this way, engineering insurance and engineering inspection have gone hand-in-hand in a very complementary manner. Over the decades, the original emphasis has been lost and there exists to this day a view, in certain parts, that engineering inspection is tantamount to another form of government stealth tax. The law says that plant and equipment have to be inspected, so that is that and there is no escape from the cost.

In the UK it is estimated that there are approximately 13.3 million items of machinery requiring regular inspection to remain compliant with various H&S regulations. At any one time, a proportion of these items will be defective.

Many curse the burden of H&S legislation but few would argue against the saving of life that has come in its wake. One look at the level of fines being imposed by the courts today helps to illustrate what the previous government thought about workplace H&S. Then relate those costs to the company balance sheet to realise that good management and good H&S really are closely linked.

Prior to the election, the Conservative party had pledged to sweep away what it described as Labour's "bureaucratic inspection regime" and replace "regulator-run public teams of inspectors with a model closer to financial controls and audits".

Outlined in a policy paper entitled Regulation in the post-bureaucratic age, published late last year, the Tories envisaged that certain 'low-risk' companies could arrange their own 'independent' audits and, if they passed, allow them to refuse HSE inspectors access to their sites.

Such a controversial model could involve firms employing professionally qualified experts in regulatory areas such as H&S, in much the same way as accountants are employed to ensure that correct internal processes and controls are in place, and that reported results are reliable.

But is the current regime as bureaucratic as is being portrayed? Will new plans actually save more lives and result in fewer injuries in the workplace? Will the number of businesses fined actually reduce?

To its credit, the HSE has been campaigning against an over-weaning and unbalanced H&S culture — using the mantra of proportionate response. The 'bonkers conkers' culture is more likely to be caused by H&S 'amateurs' — who over-react out of fear and ignorance — than by anything the HSE has said or done.

Nevertheless, one way or another we have developed a strongly risk-averse culture in our private and working lives. Indeed, there is likely to be an outcry against anyone that suggests an equation comparing monetary cost with lives saved — 'one death too many' were the words used in a recent damning government report on construction worker deaths.

Is this the right approach? Do people stop driving because people are killed on the roads? Do they stop flying after the latest airliner disaster? Surely they would have if the policy was 'no more road deaths, no more plane crashes'. As technology stands at present, it would simply cost too much to guarantee that level of safety.

Diminishing returns

In business, this concept is often referred to as the law of diminishing returns. Everything has a price, whether it is the achievement of absolute 0∞C, perfection, or the elimination of deaths in the workplace. The scandal is that there remain far too many industrial accidents that are easily avoidable, most of which are a long way down that diminishing returns curve. Lord Young's report will highlight to businesses that, above all, we must bring home that health and safety is not about the elimination of all risk but about the application of common sense.

This said, insurers and brokers have a duty to their clients to help them mitigate risk and avoid work-related accidents. And this is a mutually beneficial service as it creates a better risk for the insurer and reduces the likelihood of a costly fine for the client.

The challenge for brokers is to ensure their clients are aware of their inspection obligations under the law. It sometimes comes as a surprise that those clients involved in commerce and service industries will have similar obligations to those who run manufacturing operations.

It is also worth remembering that engineering inspection services can produce additional revenue for brokers. Commission is earned when a client takes up a broker's recommendation for an inspection. And, brokers that charge fees will find their clients expect a comprehensive service, including information on their legal position.

Regardless of the outcome of Lord Young's report, inspections make sound business sense, support risk management — and save lives. Brokers should increasingly look to add value and provide a professional service; there has never been a better time for them to offer their clients support and guidance in this essential area.

Phil Wright is the chief engineer at Allianz Engineering