Brokers must agree suitable cover in light of Corporate Manslaughter changes

UK brokers should make their clients aware of heightened risks following new draft guidelines for the Corporate Manslaughter Act, a leading publication has said.

Professional Broking magazine examined the impact that proposed changes to the Act could have on brokers and their clients. It said that the new guidelines are set to be finalised in the New Year after a period of consultation.

The Corporate Manslaughter Act sets out the conditions of pursuing companies and organisations for gross failures in the management of health and safety with fatal consequences. Under the new guidelines, serious health and safety failures may result in far more weighty punishments for firms than before.

This has serious implications for brokers, who will need to ensure that their clients’ carry enough insurance to cover the worst of scenarios. Although insurance will generally not cover the fines themselves, the legal defence costs of these types of disputes are likely to be extremely high - and these can be covered.

One potential change is that companies in breach of the Corporate Manslaughter Act will be fined in excess of £500,000. Also, it has been put forward that organisations found guilty of lesser health and safety offences leading to death should be fined at least £100,000.

While policy-makers thought about directly linking the size of fines to the size of companies, the different financial setups of organisations in the private, public and voluntary sectors has made this too difficult. This means that smaller businesses are left particularly vulnerable to the new guidelines if they go ahead.

And larger firms do not escape punishment, either. Publicity orders, which will highlight a company’s failings after being found guilty, are likely to be introduced for all offending businesses. The size of the press advertisement will be dictated by the size of the company, and it is likely notices will need to be displayed on the offender’s website for three months too.

Brokers will need to bear all of these points in mind when serving their clients. If the new guidelines do come into force, many more businesses will have to consider upgrading their policies to ensure they are appropriately covered.