Certificates of employers' liability insurance could go from staff kitchens to intranets

The move could end the practice of hanging framed certificates in every place of business.

The move is part of a campaign by the Department for Work and Pensions to reduce the administrative burden on businesses by 25%. The DWP estimates the total cost to UK business of meeting current requirements to retain and display the certificates at £71 million.

Since 1972, employers have been required to insure against liability for injury or disease to their employees arising out of their employment. Failure to do so carries a penalty of up to £2,500 for every day without appropriate cover.

Under the Employers' Liability (Compulsory Insurance) Regulations 1998, employers must retain each employers' liability certificate for 40 years, although there is no penalty for non-compliance.

In addition, one or more copies of the current certificate must be displayed at each place of business and be "reasonably protected" from being defaced or damaged. Accordingly, most organisations frame copies of their certificates and hang them in staff kitchens or other communal areas. There is a penalty of up to £1,000 for failure to display and provide a copy of a certificate to an inspector on request.

Businesses with multiple sites have identified this requirement as a considerable burden. BT, for instance, has to display certificates in about 2,500 buildings throughout the UK.

Last year the DWP launched a consultation reviewing the regulations and the Government has now published its response, taking into account comments received from claimant and industry representatives, the Association of British Insurers and others.

Retention

The Government proposes to remove the specific requirement for retention of employers' liability certificates altogether and rely instead on the principle of business 'best practice' to encourage businesses to keep proper records, backed up by amended guidance from the Health and Safety Executive.

One of the recurring problems in 'long-tail' industrial diseases claims (where the illness may not become apparent or be diagnosed for many years) is tracing old policies that either pre-date the introduction of compulsory employers' liability insurance cover or the regulation requiring employers to retain insurance certificates. Additional difficulties are caused where companies have ceased to trade.

But the Government does not believe there is an effective regulatory solution to these problems and has rejected calls for a national database of all employers' liability policies as prohibitively expensive.

In 1999, the ABI, which represents 95% of all employers' liability providers, introduced a tracing system as a last resort for finding old polices. Its current Tracing Code of Practice includes a commitment from insurers to keep employers' liability records for 60 years.

The ABI has expressed concern that the proposal to remove the retention requirement will result in greater reliance on the Code, at additional cost that is likely to be passed on to policyholders.

The Government, though, points out in its response that it is in employers' best interests to retain insurance information. It argues that if no insurance records can be found, it is the employer who is left to pay the claim. "Strongly worded guidance will ensure that business is aware of its continuing liability and encourage the retention of records to ensure that any future claim can be met," it said.

Display

The Government has confirmed its intention to amend the display requirement to allow the insurance certificate to be displayed electronically, should businesses choose to do so. The requirement to protect certificates from damage would be removed, saving businesses some additional compliance costs.

This has the added benefit of making the information more easily accessible to home workers. For smaller businesses, however, posting a hard copy of the certificate on a notice board may remain the most cost effective option and the amended regulation will continue to allow them to do so.