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JOINT REPRESENTATIVE MEETING -
INSURANCE IN ARBORICULTURE AND FORESTRY
Representatives of forestry and arboriculture organisations met to consider problems in provision of insurance cover (particularly statutory Employers' Liability, or EL) for those working in forestry and arboriculture
The Problem
Despite intensive emphasis on risk management, claims in forestry and arboriculture are high. The total value of EL claims over the last three years has exceeded premiums by on average a factor of five. Claim numbers have increased as a result of the compensation culture encouraged by legislation permitting Conditional Fee Arrangements (No Win No Fee) actions. On top of this, the level of awards for compensation has risen steeply as a result of further changes in legislation and reflecting the present economic climate. Legal fees are estimated to account for 40% of all claims costs.
There currently appears to be only one forestry and arboriculture scheme open to new business - Algarve's with the insurer being AXA. Some one-off policies are available through insurers such as Norwich Union and NFU. AXA and others might discontinue because of the high claims ratio. However, if they pull out, thousands of policy-holders could be left without cover. No other insurance companies appear to be interested in taking this business at present.
It is a statutory requirement for employers to have EL.
The Answer
Insurers could simply keep increasing premiums to keep pace with increasing claim numbers and costs, but in the long-term this is no solution. Most current policy-holders could not afford to pay, partly because it is difficult, if not impossible, for these costs to be passed on.
In many countries, a Workmans Compensation Fund operates to which employers contribute. Claims are paid on standard scales with no blame attached. There is no indication that the UK Government wishes to go down this route and it was noted that in one state in the USA, the current employer contribution for a chainsaw operator is $50 for every $100 paid in wages - not an attractive proposition.
Proposals were conditionally agreed by all representatives present:
- 1. An application for insurance or renewal will require a health and safety questionnaire to be satisfactorily completed.
- 2. In addition, companies will have to undergo a health and safety audit at the company's/policyholder's expense and at a frequency to be determined. The trade associations are looking at existing systems (eg ISO14000, forest and chain of custody certification) to avoid duplication and extra costs. The arboriculture trade associations are considering using the health and safety standards required by the Arboricultural Association's Approved Contractor scheme to form the basis of a standard. Any additional auditing deemed necessary would be put out to tender to qualified auditors. The scheme would be based on objective point scoring with a view to helping those with minor or rectifiable non-compliances. The forestry trade associations are examining which existing forms of audit would be available to satisfy insurers.
- 3. To support the initiative of a competency in the management of health and safety. The National Proficiency Test Council is currently formulating such a competency standard for operator, supervisor and manager.
- 4. A joint approach to Government including a letter outlining the specific forestry and arboriculture problems of EL availability and costs; also explaining the knock-on effects on the economy and rural and urban development plans; with an invitation to an open forum session at the AA's annual conference on 17 September 2003. All forestry and arboriculture organisations are invited to send representatives and encourage members to attend - this session is offered free of charge but attendance must be booked by completing a booking form available from the AA at www.trees.org.uk/downloads/ConfBook2003.pdf or by telephoning 01794 368717
- 5. When some progress has been made on the details, lobbying Government will be reinforced with a general media release.
- 6. It was felt that it may be helpful to have a legal definition from a Queen's Counsel on the status of the relationship between employer and contractor. Enquiries are being made and if it is agreed to go ahead could be jointly funded by the trade associations.
- 7. To meet again in September and October and invite the Department of Work and Pensions. Views and comments to the appropriate trade association before then would be welcome.
Conclusion
In spite of this being a very positive meeting the various representative bodies present are keenly aware that the costs fall upon their members and are therefore doing everything possible to minimise the impact. It is hoped that major employers will provide support.
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