50 years ago this month, Neil Armstrong walked on the Moon. Unless you have been living on the Moon, you will know that the Professional Indemnity (PI) market has dramatically changed in the last year or so, leading to the toughest conditions for clients in the last 18 years.
So, what caused this to happen? And what can Miles Smith do to help you?
UK PI has not been a profitable line for business for insurers for many years, although some sectors within it perform better than others.
The focus of attention (and corrective measures) has largely been in the Construction field.
The trend for the changing market began with the tragic events at Grenfell. Cladding contractors (and associated professions such as architects and project managers) suddenly faced huge increases in premiums; higher excesses and narrower cover.
Risks which insurers thought were contingent (because the design element of the risk was subcontracted out) – and thus paid a very nominal rate – proved not to be the case as subcontractors’ own PI did not respond in the way expected; due to non-existence; non-renewal; ceased trading or inadequate Limits and/or cover.
Claimants also used a “scatter gun” approach against all the parties in the construction chain on the basis that one or more of the PI policies would respond, regardless of the individual Firm’s role and responsibility.
But the seismic change in the UK PI market came in the Summer of 2018. Following years of losses, syndicates and insurers finally woke up to the fact that unless they could turnaround their fortunes and write a profitable PI book, they could not continue as they had done before. Consequently, a number of markets withdrew from the sector, leaving those still remaining to take advantage of the much-reduced capacity, with higher prices and reduced cover, followed by some MGA’s losing their capacity providers.
A more disciplined underwriting approach also ensued, with subscription lines becoming the norm, together with a closer examination of an Insured’s risk management procedures.
For many account handlers, more used to PI premiums reducing every year, it came as a culture shock to suddenly being asked to sell a higher premium and harsher terms and conditions generally. Brokers learned very quickly that telling their construction clients that they had had it cheap for years did not really cut much ice in an industry with operates on notoriously thin margins.
Of course, some of us have been here before. We have seen hard markets and soft markets. We know that historically hard markets do not tend to last very long as the higher prices attract new investors. And some underwriters forget (at their peril) that brokers will always remember those insurers who deliberately take advantage of the situation, often with very little logic being applied.
So how can Miles Smith help you?
Our PI team has decades of experience and knows how to trade through the market cycles. We are fortunate to have our own in-house Facilities where we can provide quick solutions for Policy Limits up to £10m for around 70% of all enquiries received. And for those risks which are not suitable for our Facilities, we have full access to the Lloyd’s and London markets to assist with the more difficult to place risk.
And how long will this hard market last? No one knows – but observers believe it will last longer than a typical 12 months cycle; but it will certainly change before we go back to the Moon.
In the meantime, Miles Smith will be here to help; whether it is a simple risk or a more challenging risk – we will help you find the best solution during these difficult times.
Miles Smith’s professional indemnity team can provide cover for almost all classes of profession (other than solicitors and financial advisers).For more information on how we can help you secure more PI business, please visit our website. Or contact Nick Pauley on 020 7977 4911 or via email email@example.com
COMBINED PACKAGE FOR EMPLOYERS’ LIABILITY, PUBLIC/ PRODUCTS/ POLLUTION LIABILITY, CONTRACTORS ‘ALL RISKS’, MATERIAL DAMAGE AND BUSINESS INTERRUPTION WITH ONE INSURER
We are pleased to announce that we have recently launched our tradesman & professionals package on Acturis. This product offers an ETrade solution for tradesman & professionals package risks that have been declined by other panel insurers. We provide a bespoke underwriting solution for high-risk trades and this specialist product is aimed specifically at risks that have been declined for reasons such as:
- Out of appetite
- Policy limit requirements
- Operating in a specialist line of work e.g. working at height or depth
The offering utilises the existing Acturis tradesman open market question set. Miles Smith Ltd will be pre-selected and quotes that fit Miles Smith’s appetite will be returned with a status of Refer Continue. When other markets have declined you will need to generate and complete a short Additional Details form and submit this to Miles Smith electronically, within Acturis, for consideration. Without this additional information we will not be able to consider your quote request. Details of how to generate and submit the form will be contained within both the Rating Notes and Key Information areas of the Acturis quote.
All quotations will be reviewed by Miles Smith’s dedicated tradesman team and returned electronically within Acturis. The product supports new business, MTAs and renewals. It also offers quote and bind and MTA policy documentation production within Acturis for the broker.
The product is available to all Acturis brokers that already have an existing Miles Smith Ltd Terms of Business Agreement. If you would like further details about the product, or to discuss product availability, please contact our Broker Relationship team on 020 7977 4800.
Our Broker Relationship team will be attending BIBA 2019 on Wednesday 15th May and would be delighted to discuss our exciting schemes and facilities with you. Please contact your dedicated Broker Relationship Manager to arrange a meeting.
Miles Smith London Market Broking is one of the largest London Market brokers, with an experienced and driven broking team in the motor fleet and non-motor insurance market. As specialists in schemes and facilities, we place complex and high-risk business that would typically fall outside most insurers’ risk appetite. We place substantial premium into the London market and by using us, you will benefit from the influence that brings.
Below are your Miles Smith dedicated Broker Relationship Managers. Please contact them to confirm your attendance and to arrange a meeting at BIBA 2019.
THANK YOU FOR COMPLETING OUR SURVEY
The team at Miles Smith really appreciate your positive and kind words about what we do. We have identified a couple of areas we can improve and are working hard to rectify these.
To find out more about our schemes and facilities, or how we can help you with your difficult to place risks, please visit our website: www.londonmarketbroking.co.uk or contact your Broker Relationship Manager.
As new business models emerge and the “Gig Economy” takes hold, understanding working relationships and the distinctions between businesses, contractors, workers and employees is becoming increasingly complicated. So, it’s more important than ever for brokers to provide guidance on who does and doesn’t need to be included in wage roll declarations for employers’ liability cover. Getting this wrong could make declarations wildly inaccurate – as a statutory cover insurer would probably have to pay the claim, but if estimates were massively understated and insurers were not clear on who was covered, they could seek to recover the cost from your client.
There have been a number of recent legal cases relating to employment status – Pimlico Plumbers, Uber, Excel, CitySprint and Deliveroo. Individuals in these cases have been fighting to be recognised as workers rather than self-employed contractors. A ‘self-employed contractor’ has fewer rights compared to a worker who has rights to benefits such as minimum pay, paid holidays and sick pay. An employee has further rights relating to wrongful or unfair dismissal. In these cases, with the exception of the Deliveroo case which was settled out of court by the business before it progressed to a full employment tribunal, the plaintiffs were held to be workers and not employees. Deliveroo accepted no liability in the case, so we are likely to see more and more of these cases in the future.
An example of an employee in a UK liability policy would be any person who is:
a) under a contract of service or apprenticeship with the insured;
b) borrowed by or hired to the insured;
c) a labour master or supplied by a labour master;
d) employed by labour only sub-contractors;
f) under a work experience or training scheme;
while working under in connection with the business.
The above wordings or similar versions have been utilised for many years even though more recently homeworkers, outworkers and voluntary helpers have been added. The important point here is that both a standard employee (under a contract of service or apprenticeship) and a self-employed person are both included within the definition. However, there is no insurance definition for “worker”. Under the Employment Rights Act 1996, a ‘worker ‘is defined as:
“An individual who has entered into or works under a contract of employment or any other contract whereby the individual undertakes to do or personally perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer”.
In other words, a worker who is doing work under a contract but not for their own client or customer. This would fall under the insurance employee definition above.
From an insurance point of view the real dilemma is whether someone is a labour only subcontractor (LOSC) or bona-fide subcontractor (BSFC). A LOSC is regarded as an employee but a BSFC is not. In addition, there are labourers sourced from labour hire companies to consider. Sometimes it is difficult to differentiate between the three, but it is critically important to be able to do so.
An employers’ liability premium is based on wage roll, which will be the annual amount paid to all those persons that fall within the insurance definition of ‘employee’. Because these employees carry a risk, insurers will want to collect a premium commensurate, so it is vital to know who are LOSCs and include them in the wage roll figure.
In general terms a LOSC merely supplies their own labour whilst a BFSC can supply materials and equipment too and, importantly, have their own insurance. More specifically though it comes down to control. The table below may help:
Labour Only Subcontractor
Labour Agency Contractor
|Remuneration||Weekly or monthly by wages by the employer. This can include overtime and bonuses.||Contracted price for the job||Paid by the agency|
|Materials and equipment||Usually supplied by the employer. (This may include tools too although a LOSC may have his own.)||Usually supplied by the BFSC as part of the contract.||Provided by the hirer|
|Supervision and control||Under the direct supervision of the employer who can dictate how, where and when work is to be done.||Under their own control and supervision.||Under control and supervision of the hirer|
|Working hours||Usually a fixed number||Decide their own hours for the job in hand.||Could be either a fixed number of hours or the required hours for the job in hand|
|Required task||Do it all themselves||Can do it themselves or hire in others to do it at their own expense.||Responsibility of the hirer|
|Own insurance||NO||YES||Contractor may or may not have their own insurance|
|Deficiencies corrected as own expenses and time||Not necessarily||YES||Responsibility of the agency|
|Income consequences for wrong pricing||NO||YES||N/A|
|Work for other parties||Not usually at the same time||YES||Possibly|
|Can employer assign them another task||YES||NO. Would have to renegotiate contract.||Possibly|
As you will no doubt be able to see, this is an increasingly tricky issue to navigate, so as brokers it’s important to ensure you help your clients understand who a “worker” is and who just does work! At Miles Smith, we recommend that in cases where the real status for insurance purposes and potential future liability is unclear the best course of action is to fully disclose to insurers the methods, employment relationship and the relevant contract terms between the parties. This will unequivocally allow insurers to make a specific judgement and ensure that future issues are avoided.
NEW AND IMPROVED!
A HIGHLY COMPETITIVE, ALL-INCLUSIVE TRADESMAN INSURANCE POLICY FROM MILES SMITH. NOW INCORPORATING YOUR CLIENTS’ COMMERCIAL PROPERTY NEEDS
At Miles Smith, we’re all about providing something extra for our brokers. And we think our new tradesman policy does just that. You need only listen to commercial radio to know that there are plenty of insurance companies that provide all manner of tradesman polices. But how many of them package everything up into one comprehensive and highly competitive policy? Not many.
Well, we do. Unlike most other tradesman schemes out there, we bring together employers’ and public liability, contractors “all risks”, plant & tools and commercial property insurance into one scheme. After all, tradesmen are busy people, and they (and you) really don’t want the hassle of buying all the cover separately.
The scheme has been designed to include all major construction classes and cover businesses with a written health and safety policy and formal training plan for employees. Its sweet spot is where the wage roll is less than £1 million or the turnover is less than £2.5 million. But, fear not, if your client’s business exceeds these limits we have other in-house schemes to cater for this.
Our in-house underwriting team boasts a wealth of experience, a dedicated focus to customer service and fast turnaround times when you need them most.
We think it’s the future for tradesman insurance and we’d love to show you why.
For any new enquiries please email firstname.lastname@example.org or call 020 7977 4800
It’s often said that the most important assets of a business are its people, and at Miles Smith we agree. It’s why we’ve spent significant time and resource creating EIS, our Early Intervention Scheme. The scheme helps manage employee sickness absence, allowing your clients to run their business stress-free, safe in the knowledge that no matter what happens, they are prepared.
THE STARTLING STATISTICS
Employee absenteeism is an ever-increasing problem for businesses across the nation. It is estimated that the annual cost of work-related injury and ill health costs the UK economy almost £15 billion every year and that 137.3 million working days a year are lost due to sickness or injury in the UK.
THE IMPACT OF EMPLOYEE ABSENCE
Put simply, it’s far ranging. There’s the direct financial impact it will have on your clients’ businesses. Not only will they incur sick pay, they are very likely to have to fund expensive, short-term people cover to ensure they maintain business as usual. But of course, it won’t be business as usual, because in addition to the direct costs, sickness and absence is hugely disruptive to their overall operations and workflow.
There’s the immediate loss of skilled and valued staff; there’s important management time and resource being spent on arranging temporary cover at short notice; there’s the additional recruitment and training costs; there’s the increased workload on colleagues, who are quite likely to become demotivated and stressed. It’s the very definition of a vicious circle. And, of course, there’s the possibility of employers’ liability claims from the employees who are absent. There really is an awful lot to consider.
EARLY INTERVENTION IS CRITICAL
In many walks of life, you will hear about how early intervention is critical, and it’s the same for employee absenteeism. Unmanaged, short-term sickness of up to four weeks can very easily turn into long-term absence. After just six weeks of sickness absence a person’s ability to return to work falls away rapidly, with almost 20% of people who reach this point permanently remaining off sick and eventually leaving paid employment. And, common sense dictates, even if they do manage to eventually get an employee back to work, the longer they have been absent, the harder it then becomes for them to easily integrate back into the workplace. So, if your clients are not in control of the situation it can soon have a far greater impact than just the short-term issues.
So, early intervention is crucial in breaking this cycle. Surprisingly, the majority of people who leave work through ill health do not do so because of a severe illness. Indeed, most suffer from common health complaints experienced by all of us, such as muscle, joint or back pain, and mild to moderate mental health issues. Yet the issue is that without treatment these conditions often deteriorate until they become so debilitating that an employee simply feels unable to return to work. However, these are all conditions that potentially can be treated under EIS.
EIS MEETS A VERY REAL NEED
EIS has been designed to provide fast track access to treatment for employees who are absent from work due to physical injury, stress, depression and anxiety, and helps promote a speedy recovery and quick return to work.
An additional benefit of EIS is that once the employee’s treatment has been completed the employer receives a high-level report from the treating clinician. This provides details of the condition suffered by the employee, its cause, the treatment provided under EIS and an update on the condition at discharge.
The report could be helpful, in the event that an employers’ liability claim is made in the future, to identify a potential fraudulent claim, particularly as the report is compiled by an independent clinician at the time that the employee sustained the condition.
Help your clients manage their employee sickness absence by providing them with quotations for EIS. For more information, please visit www.mseis.co.uk or contact your Broker Relationship Manager at Miles Smith.
Citations from: CIPD Absence Management Annual Survey 2016, Health & Safety Executive statistics 2017, Office for National Statistics.
EXCLUSIVE BINDERS AND FACILITIES FOR THE FULL SPECTRUM OF NON-STANDARD AND DIFFICULT TO PLACE PROPERTY RISKS
As specialists, the team has the expertise to understand cover requirements, identify possible options and work closely with brokers to ensure the right insurance is provided at a competitive price.
- Wide appetite, including:
– Property under construction
– multi-tenure with high risk trades
- Cover can be tailored to the client’s requirements:
– extended perils available
– stand alone Property Owners’ Liability
– stand alone Debris Removal
– stand alone Terrorism
– D&O, Legal Expenses and Engineering covers available
- A-rated capacity
- Email presentations accepted
- Fast service from expert underwriters
- Dedicated claims handlers
THE CONSTRUCTION (DESIGN AND MANAGEMENT) REGULATIONS (CDM) 2015.
In 2015, several key changes were made to the Construction (Design and Management) Regulations, aiming to improve health and safety on construction sites across the UK. These regulations continue to apply to all types of construction work, and affect nearly all construction, engineering or development projects to date. Even though these regulations were implemented in 2015, it is important to remind your clients of these regulations, as disregarding them can result in costly consequences.
To summarise, the key changes introduced in the 2015 CDM regulations are:
1. Abolishing the role of the CDM Co-ordinator
A Principal Designer a new role is now to be appointed by the client instead of the pre-existing CDM Co-ordinator. A Principal Designer is required to plan, manage, monitor and co-ordinate health and safety in the pre-construction phase of any project.
Design decisions in this pre-construction phase have significant influence in ensuring the health and safety wellbeing of everyone affected by the work, including the public. The Principal Designer must work with the appointed Principal Contractor to create and provide a health and safety file which is accessible to all.
2. The distinction between commercial and domestic clients
A domestic client is defined as an individual who has construction work carried out on their home, or the home of a family member, that is not done as part of any commercial business. Under the 2007 Regulations domestic clients were exempt but this exemption has now been removed. However, their individual burden is minimised, due to the regulations passing the health and safety duties to other parties – the contractor, principal contractor and principal designer. Domestic clients are still required to provide a safe site for construction workers to work on, but they have less legal responsibility as the contractor is required to take on the legal duties of both the client and the contractor.
3. No Approved Code of Practice
The 2007 Approved Code of Practice (ACOP) gave practical advice to clients and contractors on how to comply with the law with on a construction site. Following the advice given would ensure that construction workers were complying with the law as far as the CDM regulations were concerned. Therefore, if a company was prosecuted for a breach of health and safety law, and it was evident that they did not follow the relevant provisions of the Approved Code, they would have to demonstrate that they had complied with the law in another way or the Court would have found them at fault. The ACOP was abolished because it was felt that this was too lengthy and difficult to follow. It has been replaced with the HSE Guidance L153.
The key area that these 2015 changes highlighted is that the legal responsibility of those working on construction sites has not only increased, but that the position has become significantly more unclear because the 2015 Regulations are not prescriptive which leaves things open to interpretation. A CDM 2015 survey published in May 2017 stated that only 24.5% were following the regulations correctly. Therefore, it is vital that your construction-based clients are aware of these regulations, and the laws that surround working on construction sites. Failing to do so can result in expensive court cases if companies are sued for negligence, and in the most extreme circumstances, can result in imprisonment if found guilty.
Irrespective of whether there is a court case involved, any breach is likely to involve the Health and Safety Executive. From 1stOctober 2012 the HSE introduced the Fee for Intervention to recoup the costs of carrying out its regulatory functions. They can now recover the costs of their investigation from the guilty party and such costs are not recoverable under standard policy cover.
For more information about the Construction (Design and Management) 2015 regulations, please visit the Health and Safety Executive website: http://www.hse.gov.uk/construction/cdm/2015/index.htm
Miles Smith London Market Broking are able to provide quotations to cover the costs of Fee for Intervention (FFI), as an add-on when we are quoting the contractor’s liability policy. For more information, please contact: email@example.com.
HELPING MANAGE ABSENTEEISM
Miles Smith are delighted to announce that EIS, their unique absence management insurance, is now live on Acturis. EIS is a simple, proven product which provides fast track access to treatment for employees who are absent from work as the result of a physical injury, stress, depression or anxiety, to help promote a speedy recovery and return to work.
Four of the top five causes of both short-term and long-term absence are stress, musculoskeletal injuries, mental ill health and back pain (CIPD Absence Management Annual Survey 2016), yet treatment for these conditions is frequently regarded as low priority by the NHS and patients can wait for several weeks to receive treatment. These are all conditions that potentially can be treated under EIS.
- Only £15.00 per person per annum plus Insurance Premium Tax (IPT)
- 20% commission available
- 1 rating question only
- Underwritten by Aviva
- Available as a standalone product or as an add-on to over 30 products
- No historical claims information required
- No GP referral necessary
- Fast track – no need to wait for NHS treatment
- Access to first class treatment after 3 consecutive working days of absence
- Immediate access to treatment after a reported motor accident (i.e. no 3-day waiting period)
- Pre-existing conditions not excluded
- 24/7 cover – absence need not be work related
- Report always provided to the employer at the end of treatment
- Physio at local and convenient locations & provided by UK wide clinically audited network
- Psychological therapies delivered over the phone
- Return to work advice & preventative exercises prescribed