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If you or your business is found to be in material breach of health and safety law, you will have to pay for the time it takes the Health & Safety Executive (HSE) to identify the breach and help you put things right. This includes investigating and taking enforcement action and is called ‘Fee For Intervention’ (FFI).

HSE_Intervention_FeeIf it transpires that you have not broken the law, then you won’t pay anything. Dutyholders who comply with the law, or where there is no material breach, will not be charged FFI for any work that HSE does with them.

FFI applies to dutyholders where the HSE is the enforcing authority. This will include:
employers
  • self-employed who put others at risk
  • public and limited companies
  • general, limited and limited liability partnerships
  • Crown and public bodies
What the law says
The Health and Safety and Nuclear (Fees) Regulations 2016, link to external website say that a fee is payable to HSE if:
  • a person is contravening or has contravened health and safety laws; and
  • an inspector is of the opinion that the person is or has done so, and notifies the person in writing of that opinion.
What is a material breach?
A material breach is something which an inspector considers serious enough that they need to formally write to the business requiring action to be taken to deal with the material breach. If the inspector gives you a notification of contravention (NoC) after their visit, you’ll have to pay a fee.
The NoC must include:
  • the law that the inspector considers has been broken
  • the reason(s) for their opinion
  • notification that a fee is payable to HSE
Where an inspector simply gives you advice, either verbal or written, you won’t have to pay anything for this advice.

How much it costs
It currently costs £129 an hour. The fee will include the costs covering the time of the entire original visit. The total amount recovered will be based on the amount of time it takes HSE to identify the breach and help you put things right (including associated office work), multiplied by the hourly rate.
Your fee may include the inspector’s time:
  • at your business or workplace
  • preparing reports
  • getting specialist advice
  • talking to you after the visit
  • talking to your workers
The fee can vary depending on:
  • how long the original visit was
  • the time the inspector spent helping you put things right
  • the time it took the inspector to investigate your case
  • any time we spend on taking action against you
Find out more
The Guidance on the application of Fee for Intervention (FFI) document (also available in Welsh) sets out the general principles and approach of the scheme. It includes examples of material breaches but does not cover every scenario where FFI might apply.

Inspectors will apply this guidance and their enforcement decisions will be based on the principles of HSE’s enforcement decision-making frameworks – the Enforcement Management Model (EMM) and the Enforcement Policy Statement (EPS).

The Guidance on the application of Fee for Intervention (FFI) document (also available in Welsh) sets out the general principles and approach of the scheme. It includes examples of material breaches but does not cover every scenario where FFI might apply.

Some Management Liability or Directors and Officers insurance products provide cover to protect against FFI.

If you would like to discuss your own Management Liability Insurance or D&O policy then please contact us on 0121 321 4600 or send an email to info@clarisksolutions.co.uk
Health_and_SafetyTwo recent cases of accidents in the workplace resulting in court cases being brought against companies and directors by the Health and Safety Executive highlights the increased risks to employees in these sectors.

The cases below are just two examples of the many court cases and fines imposed on companies in breach of health and safety regulations.

The first case involved an HGV driver who suffered fatal injuries while coupling the HGV tractor unit to a trailer.

**Speaking after the case, HSE inspector Jessica Churchyard said “This tragic incident led to the avoidable death of a young man, and was caused in part by the failure of his employer to implement and monitor safe systems of work to prevent vehicle runaways.
“This death could have easily been prevented if his employer had acted to identify and manage the risks involved, and followed the industry guidance.”


The second case resulted in the amputation of a demolition worker’s left arm and right hand.

**HSE inspector Rohan Lye said after the hearing: “If the company and its director had taken basic steps to decide how to do this routine task, and what control measures to use, they could have prevented this devastating incident resulting in an employee suffering life-changing injuries.”

In the first case involving the HGV driver, the company was fined £170,000 and ordered to pay costs of £6,268.80.

In the second case, the company was fined £150,000 and ordered to pay costs of £9,523.04. In addition, the company director was sentenced to ten months imprisonment, suspended for two years and ordered to complete 200 hours of unpaid work.

Insured risk
In both cases the companies would have had to pick up the fines. Your Employers’ Liability insurance policy will generally (depending on your policy wording) cover you for:
  • Employee compensation
  • Employee and criminal proceedings defence costs
  • Court attendance compensation
Even if you have Directors and Officers insurance as well, neither will cover the cost of an HSE investigation or resulting fines or time in prison.

How to minimise your risk of prosecution
As the two quotes above from HSE inspectors imply, both incidents could have been prevented if the employer had implemented effective risk management and approved codes of practice.

To protect your business, you will need to manage your safety documentation, training records and risk assessments etc. Every business has most of this in place but very few can easily and quickly put their hands on it and rely on it being up to date.

Our partnership with health and safety specialists “Health and Safety Assist” can help you with this.
Their online portal is a secure resource and provides access to your own safety management hub. The portal will help you simplify and efficiently manage all of the documents necessary to meet your health and safety responsibilities and comply with the relevant standards for your business sector.

There are also a host of added benefits that you can exploit as the portal becomes more bespoke to your business. It could lead to reduced insurance premiums by demonstrating you have proper management of your workplace risks and compliance with health and safety legislation.

To find out more about how working with Health and Safety Assist can save you money, protect you from prosecution and a hefty fine or prison sentence, please contact one of our team.

**Contains public sector information licensed under the Open Government Licence v3.0
Last year the government scrapped the dividend tax rate and introduced a 7.5% basic tax credit and a £5,000 tax-free amount. These measures resulted in an increase in the tax take from the director/shareholders who pay themselves smaller salaries with a higher level of dividends.

Because of the higher dividends, this group represents the vast majority of individuals who would breach the £5,000 dividend tax allowance.

The cut to £2,000 of the dividend tax allowance seems to confirm a continued appetite by the chancellor to raise more revenue from the same group of individuals.

It means an increase in dividend taxation of up to £225, £975 and £1,143 for basic, higher and additional rate taxpayers respectively.

Extracting Profit
What, if anything, can the director/shareholder do? There are three main profit extraction methods: salary, dividends and pensions.

If the director/shareholder does not require the extracted profits for day-to-day living expenses, they should consider extracting these profits by way of an employer pension contribution, where it will still enjoy considerable tax advantages.

The employer pension contribution will usually be deductible as a legitimate business expense, reducing the company’s corporation tax bill.

The wealth will then pass to the individual without tax deduction or charge assuming the contribution is within the various annual allowances.

Taxable dividends are still more tax-efficient than taxable salary.

Directors and officers insurance
Directors-and-Officers-InsuranceChanging the way remuneration for directors is calculated is just one example of an event that could affect your income.

Though it may not be possible to insure against changes in government policy, you can protect yourself against other claims.

A D&O policy will typically cover; claims from shareholders against the management, employment tribunal costs, Health & Safety Executive enquiry costs, legal and defence costs and damages arising from employment practices and discrimination.

Why businesses need D&O Insurance
  • Increase in claims against directors.
  • Growing litigious society.
  • World has no boundaries - risks associated with the legislation and regulation in any country in which it operates.
  • Absence of risk management making them more susceptible to errors.
  • You could lose everything including homes, possessions and investments.
  • Legal Expense cover is not enough.
  • Disputes following Family Fallouts - Smaller firms may be in family ownership.
  • Regulators are getting tougher.
Can you afford not to take out? For the price of a few cups of coffee per week this additional insurance cover could save your family home.
Have you reviewed your business insurance recently? Does it provide adequate cover to secure the future of your business should events take a turn for the worse?

Commercial-business-insuranceBusiness is constantly changing and risks need to be evaluated every year to ensure new threats to your business are covered. Fortunately, insurers are continually introducing new insurance products to meet these future business challenges. If you use an insurance broker, they should be making you aware of these new products and recommending updates to your policy. However, if you rely on simply renewing your existing insurance online without the support and advice of a broker, you may find that over a period of time, your insurance policy is insufficient to cover these new threats.

Your commercial business insurance will cover you for insured risks such as fire and theft, but you may need to check you are covered for more specific threats.

Cybercrime insurance
Statistics published by the government in 2014 stated that an estimated 81% of large companies and 60% of small businesses suffered a data breach. With an average cost of £600,000 to £1.15m for large businesses and £65,000 to £115,000 for smaller ones, cybercrime is no small problem.

Technology now connects millions of people both in business and socially due to the rise of connected devices and access to information. This trend has in turn led to a rise in the number of hackers who have the ability to launch cyber-attacks. These can arise from a number of sources both internally (unhappy staff, lost devices, poor data encryption) and externally (hackers, third party suppliers losing data).

Often clients assume cybercrime is covered under general liability. It’s not.

Liability Insurance
  • Professional indemnity
Providing professional advice as a freelance Consultant can be risky. If you were to accidently provide incorrect advice or omit to pass on relevant information, you could be liable to legal action against you or your business.

Professional Liability insurance cover is designed to meet your individual requirements and will pay for the legal costs of defending an action against you.
  • Directors and officers
Specifically developed for senior personnel and management. Directors and Officers insurance provides protection from legal action that could result in a claim against Director’s homes, possessions and investments.

Having legal expenses and PI cover in place is simply not enough, for example a PI policy does not provide cover against actions pursued by shareholders or employees.

Frequently taken out by larger companies, SME’s are sometimes slow to realise the potential benefits of a Directors and Officers policy. The fact is, a smaller business could be more vulnerable because it may have less stringent corporate governance procedures in place and therefore it is even more important to consider this cover.

Insurance against bad debt
Non-payment of your invoices can be a significant risk for small companies. You can protect your business against this risk by purchasing bad debt protection. Bad debt policies are tailored to each individual company, taking into consideration the type of industry, years in business, equity position, existing assets and liabilities, payment records and revenue.

According to “Company Check” more than half of small businesses have had to write off money owed to them as a bad debt in the past 12 months. If this was applied to the UK as a whole, the Federation of Small Businesses state that this would have affected a staggering 2.8 million companies.

In 2015 more than 7,000 trade credit insurance policies were taken out by small businesses. The Association of British Insurers figures show that £149 million was paid out, the equivalent of £3m per week to support businesses when a customer defaulted on payment.

Future protection
No one knows what insurance cover will be needed in the next few years. Change is happening at a faster rate and technology is advancing every year. One thing is certain, insurers will be developing new products to meet the demands of their customers and the first to hear about these new products will be your insurance broker.

Keep in touch with your broker regularly and they can advise you of the most suitable and affordable insurance for your company to ensure your business is protected into the future.

 
Directors and Officers Insurance

It all started back in 1929 with the Wall Street crash, when it was felt that many directors involved could face legal action from angry shareholders. Increasingly popular in the USA, Directors and Officers insurance over the past few years has started to emerge in the UK too. It is a common misconception that legal expenses or professional indemnity insurance provide all the cover needed, however this cover is not always adequate.

Directors-and-Officers-InsuranceEven if you have been involved in the running of a limited liability company for years without a problem, your personal assets could still be at risk. FACT: It is not just companies that are at risk, any director, officer or employee carrying out supervisory functions can face unlimited personal liability for actions they take on behalf of the company.

Having legal expenses and PI cover in place is simply not enough, for example a PI policy does not provide cover against actions pursued by shareholders or employees. Frequently taken out by larger companies, SME’s are unfortunately slow to realise the potential benefits of a Directors and Officers policy. The fact is, a smaller business could be more vulnerable because it may have less stringent corporate governance procedures in place and therefore it is even more important for them to consider cover.

A D&O policy will typically cover; claims from shareholders against the management, employment tribunal costs, Health & Safety Executive enquiry costs, legal and defence costs, and damages arising from employment practices and discrimination.

With tougher stances from the regulators the risk of investigation and fines is on the increase. In 2013 fines from the Financial Conduct Authority totalled £474m, a 50% increase on the £312m its predecessor, the FSA handed out in the previous year. A D&O policy may not cover the fine, but behind every investigation there is a significant drain on management time, legal defence expenses and potential brand damage.

Why businesses need Directors and Officers cover
  • Increase in claims - Regardless of the size of the company, they are increasingly seen as targets for criticism.
  • Growing litigious society - Employees, shareholders, investors and creditors know their rights and are far more likely to take action against a company and its directors.
  • World has no boundaries - With an increase in global business, it leaves directors exposed to risks associated with the legislation and regulation in any country in which it operates.
  • Absence of risk management - Often smaller firms can’t afford adequate risk management systems which make them more susceptible to errors.
  • You could lose everything! - D&O claims pose a threat to directors’ personal assets including their homes, possessions and investments.
  • Legal Expense cover is not enough - This should not be seen as an alternative to D&O as limits tend to be lower and provide defence costs only rather than damages as well.
  • Family Fallouts - Smaller firms may be in family ownership and therefore disputes can lead to shareholder rifts and greater exposure to litigation claims amongst relatives.
  • Regulators are getting tougher - The risk of investigations are increasing and so are the associated fines. Failing to have D&O cover could be a costly mistake.
 
"Be afraid, be very afraid” business Directors, Officers and Senior Executives have been warned, as increasing numbers fall in to cracks left in their insurance, leaving them potentially personally liable for a wide range of compensation claims.
 
Directors-and-officers-insurance-sThe “it won’t happen to me” attitude could be leading to company decision-makers cutting corners on this crucial insurance area, according to industry pundits. Ironically, Directors and Officers Liability Insurance has never been more important. The regulations governing business are growing fast, and willingness to seek compensation is keeping pace.
 
Yet with a local independent insurance broker, CLA on your team, you could have research and advice at your fingertips to guide you to the right protection for your line of work. And if ever you did find yourself facing a non-compliance claim or criminal investigation, your broker will help you reap maximum benefit from your Directors and Officers Policy.
 
Civil, criminal and regulatory actions are becoming all too common. The regulatory burden is almost as hot a topic as the state of the economy, as small and medium sized firms grapple with the pressures of compliance across 100s of issues. Health and Safety, Data Protection, Disability Discrimination, Racial, Sexual and Age Discrimination, the Insolvency Act, EU Directives and regulations, Consumer Protection, Copyright Data Protection, Pollution control – the list of “red tape” tying business down is growing.
 
Any infringements to legislation and other issues could leave company Directors paying from their own assets – like their home – if their firm is unable to pay. Negligence, default, breach of duty and breach of trust can all lead to investigations and actions, including criminal charges. You could even find yourself up against a charge of involuntary, constructive or gross negligence manslaughter, if someone is killed by your equipment, falls from your roof or dies from a road accident involving one of your vehicles.
 
But your liability could come under the spotlight for something far less dramatic – such as leaking confidential data,  revealing trade secrets or being culpable for a pollution problem.
 
It’s a myth that if your job title is not Director you are safe from civil and criminal prosecutions or action for regulatory bodies. If you are a senior decision-maker, it is your door they can come and knock on. All of this is ample reason to make absolutely sure you are covered with the right Directors and Officers insurance policy for you. An independent local insurance broker like CLA can guide you through all the options, help you identify all the risk areas, set the right limits for your business and research the most competitive premiums. We get to know your business and help you identify those risks which could trip you as a decision-maker. We can then create a Directors and Officers insurance policy that is specific to you, with appropriate limits, to give you peace of mind.
 
Then if you do ever face a non-compliance or criminal charge, we will be easily accessible and highly responsive. We can get your claim dealt with as quickly as possible, giving you the financial cushion you need to fight your case.
ISS_4780_02904Company directors and officers are coming under increasing scrutiny from shareholders, employees and other regulatory bodies such as HMRC and HSE.

While carrying out everyday duties in your role as a Director and/or Officer in your company, it is easy to forget that some of the decisions you make could leave you exposed to claims, investigations and criminal prosecutions.

Unlike a Company’s liability which is limited, Directors and Officers liability is unlimited and your personal assets are at risk.  If you have to defend a court case or settle a claim out of your own pocket, the high costs could leave you bankrupt.

In some circumstances, the company will cover the loss; however this could have serious consequences for the financial viability of the company. Who will compensate the company?

Why do you need D&O Insurance?
Mistakes happen and in a world where compensation claims are much more prevalent, it makes sense to insure company directors and officers from claims bought personally against them.

Company Directors can also be held responsible for the actions of their employees that lead to investigations or prosecutions, making it even more difficult to manage the risks.

Claims can come from a variety of sources; employees, standards agencies (for example Health and Safety Executive), other authorities, shareholders and clients.

Directors’ and officers’ liability insurance will provide financial cover for defence costs, investigations and legal expenses.

Directors & Officers Extensions
Cover includes a wide range of extensions:
  • Civil Fines and Penalties
  • Compensation for Court Attendance
  • Corporate Manslaughter / Homicide Act 2007
  • Crisis & Regulatory Event
  • Deprivation of Assets
  • Emergency Costs and Expenses
  • Investigation Defence Costs
  • Management Buy-Outs
  • Mental Anguish or Emotional Distress
  • Outside Directorship / Entities
  • Personal Liability for Unpaid Taxes following
  • Insolvency
  • Pollution
  • Retired and Former Directors
  • Shareholder Action deriving from Pollution
  • Shareholder Claim Cover

Typical examples:
  • A claim against a Director who inadvertently underinsured the office premises. Following a fire, the insurance paid out on the claim was not sufficient to rebuild the offices. The other Directors sued the Director responsible. Luckily they had taken out Directors and Officers insurance that recovered the shortfall needed to rebuild the offices.
 
  • A director of a company, which imported and distributed wine to off-licences, was disqualified for 12 years and ordered to pay a sum in excess of £1 million in connection with wrongful trading offences. Although acquitted on criminal charges, the director faced a long civil case brought by the liquidator. The finance director of the same board was required to attend the court tribunal on several occasions to testify as a witness to the court. The insurance policy provided compensation to the finance director for each day he attended court.

Cover protects you from;
  1. wrongful acts,
  2. breaches of duty or trust,
  3. neglect,
  4. error,
  5. misstatement,
  6. misleading statements,
  7. omission,
  8. negligent act,
  9. or any other act wrongfully committed.

Additional benefits include:
  • Legal assistance
  • Health and Safety
  • Tax advice
  • Stress counselling

Call us for more information about Directors and Officers insurance.

 


Employers-liability

The financial crisis has thrown director risk and liability into the spotlight. It’s clear that the increasingly tangled web
of international regulation stemming from the financial crisis is causing directors and senior executives real concern and they need to be clear about how far their cover extends.

The threat posed by regulation appears to an area leaving a number of directors hot under the collar and the one question that should be asked by directors in the boardrooms in the current climate is: do we have adequate indemnity and business insurance cover in place?

This cover is not to be confused with employer’s liability (EL) or professional indemnity (PI) cover which even under the most comprehensive policies could still leave senior personnel vulnerable to a number of personal liabilities.

Although many companies have business insurance policies in force, the level and extent of cover is reviewed infrequently and is often woefully inadequate. Directors and Officers liability insurance provides cover for the alleged wrongful acts of directors and officers of a company who qualify as insureds under the policy.

Business tips
  • Ensure your current business insurance policy offers the correct cover for your
  • Directors and Senior Executives
  • Check your current policy wording under business insurance and that senior executives are covered for the risk

If you would like to discuss how to reduce your liability as a director or senior executive, contact us on:
t 0121 3214600 e info@clarisksolutions.co.uk