Construction bosses who phoenix firms to face fines or bans

Sarah Aldridge, Credit Broking Director for TL Dallas comments on Construction Enquirer’s recent article – ‘Construction bosses who phoenix firms to face fines or bans’

 

‘The attached article suggests that changes to insolvency rules will be coming through shortly to prevent both phoenix companies rising from the ashes and avoiding paying creditors, as well as providing more protection for rehabilitating the debtor. 

These changes will take UK insolvency laws closer towards the USA rules. These changes are, in my opinion, long overdue.  There could be interesting times ahead… watch this space.’

Read the full article here.

 

TL Dallas is a leading provider of insurance solutions to protect against insolvency or protracted default exposures. If you would like to discuss your specific business needs we would welcome the opportunity to see if we can help provide more certainty in these uncertain times. Please email our Credit Insurance team on credit@tldallas.com.

TL Dallas acquire Buckingham House brokerage

The recent acquisition by TL Dallas of the specialist book of demolition insurance business of Buckingham House (London) Ltd, will trade from our City office as TL Dallas (City) Ltd t/a Buckingham House.

The founder of Buckingham House, John Norbury has  over 30 years experience as a qualified insurance broker and has specialised in insurance for the demolition contractors and allied industries since 1991. Buckingham House has also been an active Industry Service Provider member of the National Federation of Demolition Contractors since they were established.

We are pleased to extend our service offering through this acquisition and particularly pleased that Mark Clements who has worked with John Norbury for 25 years, has joined the team in City office with John continuing to act as a consultant.

TL Dallas’ Managing Director, Polly Staveley comments, ’We are delighted that John has agreed to sell his book of business to TL Dallas – it fits very well with the existing construction sector expertise that we have within the team in our City office and is further enhanced by the fact that Mark Clements, who has worked with the clients for over 20 years, has joined our team. We are looking forward to working with the clients and developing the business further.’

If you would like more information regarding demolition insurance please contact:

Mark Clements – mark.clements@tldallas.com or call 07881 934054/0207 426 5347
Mike Mitchell – mike.mitchell@tldallas.com or call 07496 888411/0207 426 5343

Alternatively, email enquiries@demolition-insurance.com

 

Working airside? What is the worst that could happen?

 

Do you ever carry out work at an airport, either land side or airside? High value buildings and aircraft, large, concentrated volumes of people – what is the worst that could happen?

Whether you are re-laying part of the runway or simply installing a cooker hood in a departure lounge restaurant, most standard Public Liability (PL) insurance policies will automatically exclude airside work, and many will even exclude any work at an airport.

 

The usual solution

The solution offered by many insurance brokers is to arrange a stand-alone Public Liability policy to the limit of indemnity required by the airport (£50M for BAA airports). This is usually provided through schemes run by the like of Marsh, Willis etc. and policies are relatively cheap.

 

The important questions

These policies will cover you while you are undertaking your work (Public Liability), but what cover does it give you after you have left the airport (Products Liability)?

If your completed works are defective and cause injury or damage, which insurance (if any) do you think will respond?

The solutions are simple and cost effective.

 

To find out more, or discuss any other Construction insurance issues, please contact Mike Mitchell, mike.mitchell@tldallas.com or call 07496 888411.

Invisible Risks

In the face of increasingly sophisticated risks or ‘invisible’ incidents, businesses and individuals are finding they need to consider new areas of protection in addition to the more traditional risks that they would normally insure against, such as fire or flood.

These additional areas of risk include:

 

Commercial Crime/Financial Fraud

Recent statistics (RSA) suggest that between 25-33% of all companies suffered some sort of fraud in the last year – either a direct financial loss or misappropriation of assets.

It’s not only large companies that need to protect themselves: nearly 50% of those targeted had fewer than 1,000 employees and the average size of the loss was around 1.3% of turnover.

As with all risks, prevention is better than cure: just as you should have a robust fire risk assessment, we suggest you carry out a fraud risk assessment. This would identify any threats and put in place systems to detect fraud and prevent it wherever possible.

Even if all these systems have been implemented but the worst still happens, insurance is available. This will not only cover your loss, but also any expenses relating to the loss, such as lost management time, any reputational damage and lost business opportunities.

Policies are also available that cover both fraud by employees and third parties.

 

Cyber/Data Breach

Statistics from Garter Inc suggest there are currently 6.4 billion devices connected to the internet and this will increase to 20.8 billion by 2020.

Such explosive growth poses risks to both individuals and businesses, with the risk of cyber attacks and data breaches increasing exponentially.

Insurance solutions to this threat are now more sophisticated – there are products on the market that can cover your business for first and third party losses, costs of PR and reputation management and loss of income following a cyber-attack.

 

To discuss this in more detail, please contact your nearest TL Dallas branch.

Health & Safety breaches – the true cost

 

We take a look at the Sentencing Council’s revised Definitive Guideline to Health & Safety Breaches and increased fine levels.

Safety professionals have for some time spoken of the hidden (and uninsured) costs of accidents at work, but recent changes in the Sentencing Council’s Definitive Guidelines for Health & Safety Breaches (effective from 1st February 2016) are already resulting in huge increases in the levels of punishments (a very visible and direct cost) being handed out by the courts.

Fine in cases after February 2016 can be ten times larger than before.

 

ORGANISATIONS – HEALTH & SAFETY BREACH FINES

In the new Guidelines, fines are calculated through a number of considered stages:

  • CULPABILITY
    • Very High – deliberate breach or disregard to the law
    • High –Serious or systemic failure within an organisation to address risks to Health & Safety, typically characterised by ignoring concerns of employees or others, failing to implement changes following other incidents, or allowing breaches to subsist over a long period of time
    • Medium – Systems were in place, but these were not sufficiently adhered to or implemented
    • Low – Failings were minor and occurred as an isolated incident
  • HARM
    • The level of harm or potential harm that an offence creates
    • How many people (employees and members of the public were exposed)
    • Whether the offence was a significant cause of actual harm
  • COMPANY SIZE
    • The financial standing (in terms of Annual Turnover or equivalent) of the offending company
  • REVIEW
    • Adjustment based on how proportionate the fine is, taking into account profitability of the company, savings they made through taking safety shortcuts, risk of the business closing as a result of paying the fine
    • Consideration of ancillary orders (remediation of specified failings, compensation etc)
    • To illustrate, take an example of a company with a £12M Turnover, deemed to have ‘Medium’ culpability in an employees death (or even a ‘near-miss’ that could have resulted in death) would now be looking at a fine in the range £300,000 to £1,300,000 before the review/adjustment stage. 
    • If the same company was deemed to have High Culpability, that range increases to £600,000-£2,500,000.
    • If you compare these figures with a 2014 case against the significantly larger Thames Water for a workers death, which resulted in them paying £361,000 in fines and costs, you can see the revised Guidelines will result in hugely increased fines being paid.

 

INDIVIDUALS – HEALTH & SAFETY BREACH FINES

The revised Sentencing Council’s Definitive Guidelines also address the penalties against individuals for Health & Safety breaches.

‘Individuals – Go directly to Jail – Do not pass GO, do not collect £200!’

Culpability and Harm are judged in the same way as the company fine, but the individual would also have to make a declaration of their finances.

Using the example given above, for Medium Culpability the penalties faced by the individual are described as “Band F fine or high level community order – 1 years custody”.  Note that the starting point is set at 6 months imprisonment and a Band F fine means 500% to 700% of the individuals weekly income.

 

CORPORATE MANSLAUGHTER

Utilising a two level view of Culpability and Harm (High and Low), the Corporate Manslaughter sentencing also uses the same company size categories as is applied to offending company fines for Health & Safety breaches.

There is still an adjustment/review process, but continuing the example of a death at a company with a £12M Turnover, a High Category offence would result in a fine in the range £1.8M to £7.5M, with a starting point of £3M.

There is much debate amongst Safety professionals about the overall impacts of the new Sentencing Council’s Definitive Guidelines, but one thing is clear, if there is any weakness in your Health & Safety regime (whether injury results or not) the financial price for getting it wrong is increasingly severe.

 

The Sentencing Council’s Definitive Guide can be found here, but for further details and advice, please contact your nearest TL Dallas branch.

Can Your Insurers Cope With The Heat?

If you use heat in your work, do you understand what your insurance requires you to do?

If you don’t and you breach the conditions, then you effectively have no cover.

The idea seems reasonable, but what are the conditions you need to comply with, and are they reasonable in the first place?

  • Do they require you to connect to a hydrant? How could you do that without advanced permission from the authorities to use the hydrant?
  • Do they require you to have a set number and size of extinguishers, within a set distance from the work?
  • Do they need to have the property owner/occupier (or their representative) present throughout the application of heat?
  • After completing the heat work, do you have to check the area at intervals? 30 minutes, 60 minutes, 90 minutes or all three. Do they have to keep a written record of those checks?

Most critically, does the warranty apply to your direct employees, or anyone (including sub-contractors) working on your behalf?

Most critically, does the warranty apply to your direct employees, or anyone (including sub-contractors) working on your behalf?

  • If the conditions apply to anyone working on your behalf, can and do your sub-contractors comply with your heat conditions
  • If they do comply with your policy heat conditions, is the sub-contractor also complying with their own policy conditions?
  • If not, then there was no point checking that the sub-contractors have insurance – it won’t respond to a claim against them anyway – leaving you financially exposed.

The solutions are relatively simple, but the first thing you need is a broker who has thought about the problem.

To discuss solutions or any other Construction insurance issues please contact Mike Mitchell by email, mike.mitchell@tldallas.com or call 07496 888411.

Novating Contracts – The Insurance Time-bomb?

Do you ever have the employers professional team novated to you? Do you understand what all of the risks are?

Increasingly Professional Indemnity insurers are including a clause on their policies requiring that their insured (you) do not waive or in any way limit full rights of recovery or subrogation against another party.

It is common practice for an employer on a building project to engage their own professional advisers before appointing a main contractor. When the main contractor is appointed, the employers own advisers are often then novated across to the main contractor. A straight novation means that the contractor assumes the employers role in their contract with the adviser – complete with all the pre-existing terms and conditions of that contract.

Many professional advisers are engaged on their standard terms & conditions, which usually contain contractual caps on the advisers liability. For example, a very large international consultancy uses standard terms & conditions which cap all liability for the projects it consults on at £1M.

By accepting a novation from an employer, on the advisers standard terms, you risk invalidating your own Professional Indemnity policy.

Bear in mind that the contracts you work on now are the same ones that may generate claims in 3, 5 or even 12 years time and the policy which will respond is the one which is live when the claim is made against you. With a disconnect between your insurance arrangements and your contractual arrangements there is a real risk of creating a Professional Indemnity time-bomb with the potential to damage your business for years to come.

Irrespective of insurance you, as Main Contractor could be signing up to contracts and warranties, with requirements to maintain £10M Professional Indemnity, while the negligent party on the employers original professionals team have been able to cap their liability at a significantly lower level, leaving you exposed.

There are simple and cost effective (in many cases they are free) solutions to the problem. For further details or to discuss any other Construction Insurance issues please contact Mike Mitchell by email, mike.mitchell@tldallas.com or call 07496 888411.