Health & Safety, can D&O help?

Directors and officers of corporations in the UK are facing a far greater risk of financial loss than ever before. Today, they are liable for actions that involve the corporations they serve.

This includes everything from unhappy customers who take legal action, to formal investigations that result in fines and even criminal charges.

As legal action and government enforcement become more common, the effects can impact those holding responsibility in any organisation. Within health and safety, fines for businesses found liable for violations have more than doubled from January 2016 to January 2017 to a stunning £73.2 million. The trend does not seem to be slowing. A single incident can lead to involvement from numerous public bodies, resulting in significant costs passed on to the directors. Legal representation alone represents high financial expenses in addition to fines that are levied against directors.

Because of the high rate of fines for health and safety violations, businesses are making their health and safety policies a top priority; it’s a case of prevention is better than cure. Directors are responsible for creating the policies that will protect the people working under them and the general public that use their goods and services. Health and safety law mandates both, the responsibility of directors in health and safety policy, and the liability of directors when they fail to establish appropriate policies.

Where are we now?

In the past year, the highest fines have occurred in manufacturing and construction. Both sectors also saw high year-over-year increases. Fines can top £20m under the current guidelines. It's no secret that one of the biggest challenges today for companies is how to deal with the Health & Safety Executive when they launch a probe.

One incident can have a ripple effect through a company and its boardroom when multiple investigations are occurring, and the directors are vulnerable to fines and charges from more than one source. In situations where more than one director is involved, additional legal representation may be required and D&O insurance can cover such costs.

What to do

D&O insurance (short for Director’s and Officer’s Liability insurance) is a form of liability insurance that reimburses the directors or the organisation for liability related losses that may occur and provides defence costs if a situation requires legal action.

Directors choose to work with an organisation because of their business acumen, not their liability exposure. The majority are using their skills and resources to ensure the right steps are taken to prioritise health and safety. However, it’s important to ensure they are protected from liability that comes from their role. In the same way that directors create policies that protect their workers from harm and injury, D&O insurance protects directors from the financial hazards of their position.

In answer to this articles title - Health & Safety, can D&O help? The answer is yes but the right policy wording needs to be secured. For more information on how our D&O policy can provide straightforward protection, please contact us today.

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