The insurance industry and the health and safety industry are inextricably linked. After all, if you have employees based in the UK, you need employers’ liability insurance. If one of your employees suffers a workplace injury, any subsequent claim is likely to go through that insurance. Whether your insurers pay out or not, you may see an increase in your premiums when it comes time for renewal.
So, anything that impacts health and safety will also impact the insurance market and, ultimately, the premiums that employers must pay for insurance.
What current trends are having the biggest impact in this regard, and what is likely to happen in the future?
Reduced Financial Burden
A report by the law firm BLM and the Institute of Directors touched on this topic. That report concluded insurers in the UK will face a lower financial burden in the future from workplace injury and illness claims.
A lower financial burden for insurers should lead to lower insurance premiums for employers. It is important to go into this further, however, particularly in relation to the safety of workers.
Before doing that, though, it is important to understand why the report authors came to this conclusion. It came down to two factors:
- The anticipated increase in the use of automation technologies; “coupled together” with,
- The growing trend for workers to be self-employed rather than employed.
The first of the above points is positive for workers – positive, at least, from the perspective of health and safety. After all, while automation technologies will result in some people losing their jobs, those same technologies will also make remaining workers safer.
More on that in a moment – what about the second point above? Any potential safety benefits from this point are not as clear. This is because workers don’t become safer simply by becoming self-employed.
Who has Responsibility?
The report authors are not clear on how being self-employed directly results in a lower financial burden for insurers.
Many factors could be at play, however. This includes a blurring of the lines as to who is responsible when an injury or fatality occurs in the workplace, i.e. is it the fault of the business or the independent contractor/self-employed person? Where does the responsibility demarcation line exist? Where should it exist in the future? When does ultimate responsibility for health and safety shift from the business to the self-employed person?
This should be looked at in terms of the controversy in some sectors of businesses employing people who are self-employed on a very loose definition of the term. In many of these controversial cases, the so-called self-employed worker only has one “client”. This means only one stream of income, i.e. from the business employing-but-not-really-employing them.
Many campaigners and politicians want to give these workers employment rights, and there have been cases in the courts where the law is being clarified. How this plays out in relation to health and safety responsibilities is not known.
That said, it is interesting that the report writers mentioned above appear to predict, at least at the time the report was written, the law would end up in favour of keeping the responsibility for health and safety with self-employed workers.
Future Trends to Look Out For
As you might expect, the insurance industry does provide businesses with advice on how to keep employers’ liability premiums down. That advice typically involves taking steps to make workers safer. Typically, however, the advice is traditional health and safety advice, i.e. conducting routine risk assessments, providing employees with training, keeping health and safety policies up-to-date, providing adequate PPE, etc.
While it is traditional advice, it is also essential – businesses should absolutely be doing all these things as a minimum.
Advances in technology, however, particularly automation technologies, are likely to lead to changes in the insurance market and changes to the advice that businesses receive.
For example, workers of the future who must lift heavy objects could wear an exoskeleton to reduce the risk of injury. It is not hard to foresee a time when this is a requirement on some insurance policies.
There are other examples too, including the trend of robots, drones, and autonomous vehicles taking the place of humans when dangerous substances are involved or when the work takes place in a dangerous situation, position, or location. Examples of the latter including working in confined spaces, at height, or in contaminated zones.
Again, it is easy to understand how this sort of technology makes workers safer which, in turn, decreases the risks faced by insurance companies offering employers’ liability plans. After all, it is much safer to send a drone or autonomous vehicle into a contaminated area than it is to send a human, even if that human is wearing the latest and most technically advanced PPE.
Cobots are another example of an automation technology that is reducing the risk of injury or fatal accidents at work. This is happening today on manufacturing lines, and it is a growing trend. The is because cobots are designed to work alongside people safely, i.e. if a person is at risk, the cobot will automatically stop. This distinguishes cobots from robots as robots continue operation until manually stopped, regardless of the risk to people.
While some of the above examples of automation technology are about protecting existing workers, other examples involve replacing them. This is a fact of automation, i.e. it is reducing, and will continue to reduce, the numbers of people working in a range of different roles.
One example is manufacturing. In 1966, 9.1m people worked in manufacturing in the UK. Today that figure is 2.7m.
Of course, fewer people working in these roles mean there are fewer people at risk of injury. This, in turn, will lead to fewer claims for compensation which will impact the insurance industry, particularly in relation to their assessment of risk. This may then lead to lower insurance premiums for employers.
The Big Data Impact
Another area where technology is likely to change the insurance industry in relation to health and safety is in the increasing use of big data. With the enhanced data analysis that big data makes possible, insurers may identify new trends as well as improving their ability to predict future trends.
Put into simple and rather crude terms, this means big computers and smart data scientists looking at numbers and being able to predict sectors, businesses, departments, work practices, and, potentially, individual employees who will suffer a major accident.
Those insurance companies are likely to then pivot to adjust for these predictions. That could include increasing premiums as well as, hopefully, providing details of its analysis to businesses.
The Question of Liability
We already touched on the question of liability above when talking about where the future line will be drawn between self-employed workers and businesses. Liability is an issue when it comes to automation technologies too.
This question is at its most public in relation to autonomous vehicles. For example, if an autonomous car of the future is driving itself in full autonomous mode and it crashes, who is responsible? Is it the person in the car, the owner of the car (whether that is an individual or a business), or the car manufacturer? These are big questions where there are currently no clear answers because technological innovations are way ahead of governments’ ability to legislate.
This applies to other workplace situations, too. The cobots mentioned above are one example. What happens if there is a failure in the control system which causes the cobot to seriously injure or kill the person it is working alongside? Should responsibility for that accident remain with the employer? Or, should the company who programmed the control system be responsible, or the company who built the cobot?
The only thing that is for certain with all these issues is that things are changing. The question of insurance is primarily one for insurance companies and businesses who pay the premiums. That said, these changes will have an impact on workers, so everyone will feel the effects.