Steamed up

Retail is big business for the UK but it also brings more than its fair share of risk. Ian Calder and Phil Wright explain how brokers can ensure premises are safe to prevent insureds getting burnt by litigation

Accounting for approximately 25% of national gross domestic product, the retail sector is an important part of the UK economy, with sales in 2004 amounting to £246.9bn. This income alone is greater than the combined GDP of Switzerland and Ireland.

Considering that 11% of all enterprises in the UK are retailers, employing around three million people and ranging from corner shops to huge out-of-town shopping centres, a complex such as Bluewater amasses all the dangers of everyday city living into one central hub for a risk manager to contend with.

As shopping is a regular activity, there is an increased likelihood of accidents happening in an environment that the public takes for granted as being 'safe' - effectively managed, these risks can be mitigated and accidents prevented.

There are three aspects to typical risks in a shopping centre. Firstly, there are the dangers and risks imposed on customers; secondly on the staff; and thirdly, the potentially crippling reputational risks.

Hazards such as slips and trips on wet floors, bacteria in water tanks from faulty air conditioning systems, curling carpet edges, protruding shelf edges, escalators and lifts are evident all around. However, there are less obvious risks that brokers should ensure clients are equally aware of.

For example, Londoners drink more than 380 million cups of coffee a year and coffee shops are commonly found in shopping centres. These premises will make use of a boiler ranging from around one litre in size (a carton of orange juice) to more than 20 litres (an average-sized petrol tank).

By law, these boilers must be inspected on a regular basis because the consequences of a failure could range from scalding customers and staff to an explosion that could cause death and destroy premises. However, an alarming number of coffee shop owners are unintentionally flouting the law and not having the necessary work carried out because they are ignorant of the facts.

Many stores also contain equipment such as ATMs, auto checkouts and self-service counters. Such electrical and mechanical equipment requires testing, maintenance and, where necessary, statutory inspection.

In addition, shelving and storage should be accessible at an appropriate height and clearly labelled. Well-maintained trolleys should be available and - for shopping centres - there should always be clearly marked escape routes and incident management procedures in place to cope with large numbers of people.

Personal injury compensation is high on the political agenda, and with claims management companies setting up stalls in shopping centres the emphasis on health and safety is increasingly important.

In a litigious society, tenants have a responsibility under law to maintain a decent standard of health and safety. Stemming the tide of claims will impact positively on premiums, and brokers willing to advise on health and safety issues will be welcomed by insurers and insureds.

The Health and Safety at Work Act 1974 clearly stipulates that employees have a right to work in a safe environment. As the Act has matured, more complex issues have come into play. For the retail sector, most risks can be significantly reduced if time is taken to train staff in how to work safely in their environment. High staff turnover means that the industry is reliant on part-timers and temporary staff, and Health and Safety Executive statistics show that the accident rate doubles for part-timers.

A key feature of good management is proper training and supervision as well as access to safety equipment and clothing where required. The most common risks are activities that are not properly assessed - retailers need to get on top of health and safety as the sector is becoming increasingly vulnerable to emerging risks.

For example, food poisoning and legionnaires' disease are potential threats. Linked directly to poor water supplies, legionnaires' could be the asbestosis of the future. However, adequate hygiene standards implemented by trained staff will diminish the risk.

Clean self-service counters are not an accident waiting to happen, and a small shop with good congestion management will not bring a flurry of slip and trip claims. Retailers that fail to put the adequate procedures in place, however, invite claims.

Pilot scheme

In order to assist retailers, the HSE launched the pilot of its Workplace Health Connect scheme earlier this year. This scheme has been designed to give confidential and practical advice on workplace health, safety and return to work and retailers can use the tool without charge. After all, those who can manage their risks will help themselves. Poor risk management will also incite risks to reputation and there is nothing like a spurious claim to get the national headlines screaming.

Recently, The Daily Mail carried a story about an insurer that was sued by a woman who had tripped over a pile of claims forms left strewn on the floor. For a small business, the same style of claim could force the retailer to shut up shop. It could also discourage customers, force businesses to be closed by health and safety inspectorates and, in the worst-case scenario, lead to a serious accident.

With litigation being so prevalent, it is vital that brokers inform clients where their duties lie. Customers rely on brokers and service providers to provide timely and accurate advice; it is in the interests of everyone that all aspects of the relevant legislation are understood and observed. Inspections make sound business sense, support risk management and save lives.

Returning to the shopping centre example, Bluewater is officially listed as a potential terror target but the likelihood of an attack is slim compared to slips and trips, burns from hot coffee machines, or a visit from environmental health.

Health and safety advice is a value-added tool, which brokers need to offer clients in order for risks to be better managed - retailers can mitigate risks significantly with a few simple procedures in place.


Customers are the lifeblood of the retail sector but the number of people present increases the risk of third-party injury and property damage.

To reduce this risk, public areas should:

- have clear access.

- be correctly sign-posted.

- be well-lit.

- be well-maintained with dangerous items locked away.

Ian Calder is underwriting quality and integrity manager for Allianz Cornhill Commercial, and Phil Wright is chief engineer at Allianz Cornhill Engineering.

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