Pensions Update

The Pensions Act 2008 require all employers (other than one director-owner organisations) to offer a qualifying workplace pension scheme to all “eligible jobholders”.

Here are some important elements of the new law:

• A business needs to identify who are “workers”.  “Workers” are defined as any individual who works under a contract of employment or has a contract to perform work or services personally and is not undertaking the work as part of their own business.

• There will be three categories of “workers” – “eligible jobholders”, “non-eligible jobholders” and “entitled workers”.  These categories are decided on age and earnings level.

• A National Pensions Savings Scheme requires automatic enrolment for all "eligible jobholders" unless the employer already offers a scheme, which is as good or better.

• The Government's scheme will be known as the "National Employment Savings Trust" (NEST).

• The Pensions Regulator will contact all eligible employers at least 12 months prior to their scheme starting to let them know the process.

• Both employees and employers will contribute to the scheme, which will be compulsory for the largest employers from October 2012.

• The scheme will be gradually introduced over a period of four years, starting from October 2012.

• The Pensions Regulator will ensure that employers fulfil their duties under the Act.

• Employers must not offer advice on pensions as this is against the Financial Services Act.

• Employers need to be aware of the qualifying pensions and exemptions from auto enrolment.  They also need to “opt in or opt out” of the scheme annually.

• Employers need to consider amending employee contracts and handbooks to reflect the new pension arrangements

I work with a number of associated professionals including HR, Health and Safety and Financial Advisors.  If you need Insurance, HR, Health and Safety or independent financial advice, please give me a ring and I’ll be happy to help.

  

UK Law Reform

The Law Commission and the Scottish Law Commission are conducting a joint review of insurance contract law. The third consultation on the insured’s duty of disclosure and law of warranties was published on 26 June 2012.

Under current law, a business policyholder has a duty to disclose every material fact known about the risk to be insured. Failure to do so may lead the insurer to refuse claims.  In some cases, not every material fact is known.  Information may not be deliberately withheld.  The proposal is that insurers ask the relevant questions to help ensure that every material fact is disclosed. Fairer consequences of breaches where the policyholder was not deliberately misleading are also being proposed.

An insurance warranty is an important term.  Unless the insured exactly complies with the conditions of a policy, the insurer may refuse claims.  It makes no difference if the breach is trivial, not material to the risk or if the policyholder remedies the breach prior to the loss incurred.

For example if a policy requires stock to be stored 6 inches off the floor to minimise flood damage and the insured does not comply, the insurer may not pay a claim following a burglary.

Proposals include that the insurer’s liability is suspended only for the duration of the breach and were applicable be relevant to the particular risk only. This would be subject to freedom of contract for business insurance.

Get in touch, talk through your insurance needs, and make sure you and your business are covered by the right policies.

7 Reasons Why Insurance Companies Don’t Pay Claims

I hope that you have never been in the position to have an insurance claim refused.  If you have, it was probably for one of the following reasons:

1)          The claim was outside the scope of the policy.

                Your policy will only cover the risk specified.  It is important to consider all your risks carefully.  Those you cannot manage or eliminate, you need to insure.

2)          You failed to comply with the terms of the policy.

                There will be certain conditions you will have to meet in order for an insurance company to underwrite your risk.  No company is going to insure a building that has open fires burning in the centre of a warehouse full of flammable stock.  An extreme example I know but it is important to know that your policy is not being invalidated by something you are doing now.

3)          Your policy does not include consequential loss.

                Make sure your policy covers all the risk of any incident.  Particularly consider your ability to continue trading after a major incident.  Your buildings and contents may be insured but how will you remain in business if you have no means of doing business anymore?

4)          You gave false statements when you applied for insurance.

                Your insurance company will only insure what is real.  Lie and the policy will be void.

5)          You failed to pay your premium on time.

                Sounds obvious but you are not insured unless you pay the insurance premium.  Yes, you may feel being a few days late does not matter but if you have not paid your premium you are simply not insured.

6)          You take too long to report the claim.

                Make the claim as soon as possible. 

7)          You failed to disclose all relevant facts.

                Over 11 per cent of corporate insurance buyers have had a claim challenged on non-disclosure grounds in the last two years. Insurance policies are one of only a few contracts in which uberrima fides “utmost good faith” applies.  It is important you inform your insurance broker of all relevant information.

I’ll help with any claims, ensure the paperwork is correct and with the insurance company in good time.

The Bartoline Extension

Incidents happen and thankfully most of these incidents don’t lead to anyone being seriously injured.  The environmental damage can, however, be significant.  Sometimes you need to think about the wider implications of your business’s risks.  This is an example of why…….

Bartoline manufactures a number of items for the home improvement market including solvents and wood care products.  A fire at the company’s premises on 23rd May 2003 lead to significant pollution as chemicals were washed into two local watercourses.

The Environment Agency used its statutory powers under the Water Resources Act 1991 to carry out emergency work to minimise environmental damage and to remove and dispose of contamination.  The Agency then sought to recover costs from Bartoline.

The total costs of the clean up operation, including the requirements the Agency made of Bartoline themselves, amounted to over three quarter of a million pounds.

Bartoline made a claim for these expenses under its public liability policy. Royal and Sun Alliance (RSA), Bartoline’s insurers, refused indemnity, stating that the expenses incurred did not fall within the scope of the policy.

Bartoline took RSA to court in 2006, alleging breach of contract, seeking clarification of the legal meaning of the term "damages" in an insurance context. The judge, however, found in favour of RSA.  The judgement was, in essence, that the liability for damages is based on an actionable wrong. Bartoline’s liability to the Environment Agency was statutory and the money owned to the Agency was a debt.

As a result of this ruling, liability insurers may now provide a “Bartoline extension”, covering the insured for limited costs of clean up required by environmental authorities.

Our Hazardous Haulage Scheme includes a “Bartoline extension”.  If you are concerned about and want to insure against any risk your business may be exposed to in relation to potential environmental damage, please give me a call.

6 Reasons to Use an Insurance Broker

Insurance brokers are experts in the field of insurance.  So as you might expect there are some really good reasons to use a broker.  Here are just 6:

1)          Brokers know what they are looking for. You probably only research the insurance market around your renewal date.  You can save a lot of time by asking a broker to do the searching for you.

2)          Brokers aren’t tied to one or two insurance companies.  So a broker is free to review the whole market on your behalf.

3)          Brokers can match your specific requirements to the myriad of policies available.  Getting the right policy that covers your exact needs could save you thousands of pounds.  It’s too late when the claim goes in to find out that you weren’t actually covered in the first place.  You may think all policies are standard but they are not.  Many businesses need tailored insurance policies depending on actual circumstances.

4)          Brokers are likely to get better terms for their clients.  This isn’t just because of economy of scales.  Brokers do a good deal of business with insurance companies.  They will get a good price.  It isn’t just volume of business that counts, it’s the understanding of the industry too.  Brokers know the insurance companies and brokers know you.  Where you may face reluctance from insurance companies, brokers are able to remove that element of uncertainty and facilitate cover.

5)          Brokers’ business is based on reputation.  They won’t recommend something that doesn’t fit.  It’s important to them that they ensure the client understands the risks of their business and transfers the risk (as necessary) to an insurance company.  What develops is a close business relationship based on trust.  That thorough understanding enables you to be covered now and as your business changes.

6)          Brokers can help you with your claim.  Should the worst happen you can rely on your broker to help with the paperwork and the process and enable a speedy payment.

Finally it’s worth noting that brokers have Professional Indemnity cover which gives you the added protection should he get it wrong.  If you'd like any help with your insurance please get in touch.

Directors’ and Officers’ Insurance

Directors’ and Officers’ Insurance D&OI, covers company directors, officers and senior managers against claims arising from the decisions and actions taken as they manage a business. Any director or company officer will have ultimate responsibility for the business and its employees.

Directors of a “limited liability” company are not necessarily covered for legal actions.  Directors' personal liabilities are unlimited and in the course of carrying out everyday duties for a company, directors are exposing themselves personally to lawsuits, investigations and criminal prosecutions. Directors are personally liable to defend any claims and their personal assets are potentially at risk.

Directors have a number of duties including the common law duty to act in the same manner as “the care of an ordinary man would take in the same circumstance on his own behalf”.  The law expects a senior manager to be experienced, reliable and honest.  Directors also have a fiduciary duty to act in good faith and in the best interest of the company.  There are also statutory legal duties outlined in many laws including Companies Act 1985, Insolvency Act 1986, The Bribery Act 2010, Environmental Protection Act 1990 and the Health and Safety at Work Act 1974.

D&OI may cover you in many cases including financial misconduct, health and safety issues, employment liability and criminal activity and may pay legal costs and expenses and any civil damages awarded. Shareholders, employees, creditors, regulators, suppliers and customers may all take action against you.

 
If you’d like to know more about D&OI, need to renew or revise your current policy, please get in touch.