INSURANCE. Corporate Manslaughter IN THIS ISSUE. Find out more...

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1 Corporate Manslaughter Find out more... IN THIS ISSUE ELTO Changes IT Time Bomb Retirement Changes Shorthold Tenancy Deposits Key Person Insurance

2 Corporate Manslaughter Gloucestershire firm, Cotswold Geotechnical (Holdings) Ltd, has become the first company to be convicted under new corporate manslaughter legislation. They were found guilty of the charge and fined 385,000 after a geologist died when a trench collapsed on him. The Geologist, Alexander Wright, 27, from Cheltenham was taking soil samples for a housing development in the 12.6ft (3.8 metres) deep trial pit when it caved in. The court was told that Mr Wright was working alone after his boss, the company s managing director, left the site and that the pit was not supported by timbering, which the Crown alleged was against health and safety laws. Gloucestershire Constabulary said police had conducted a lengthy and thorough investigation working with colleagues from the Health and Safety Executive and As a result of our investigation we found that the company had a cavalier attitude towards health and safety. The way it taught and supervised junior engineers was inherently dangerous and the methods of working were outdated. They added that This case should also act as a salutary lesson to others working in site investigation and specifically within the geotechnical industry. We hope that today s outcome may go some way towards protecting others working in similar fields. The judge said that the gross breach of the company s duty to Mr Wright was a grave offence and that the company could pay the money back over 10 years at a rate of 38,500 per annum. He explained the fine marked the gravity of the offence and would have a deterrent effect on companies to strongly adhere to health and safety guidance. The Corporate Manslaughter and Corporate Homicide Act 2007 came into force in April The penalty under the new legislation is an unlimited fine. For more information regarding Health & Safety regulations please contact The Insurance Partnership Risk Services on

3 ELTO Changes We all know that some industrial diseases only appear decades later and for some, tracing employers liability insurance policies to make a claim can prove difficult especially if employers ceased trading or they may have not kept old insurance records safe. From Spring 2011, ELTO (Employers Liability Tracing Office) replaces the current voluntary Employers Liability Code of Practice (ELCOP) tracing service, which has been in place since 1999 and has helped around 20,000 claimants trace the EL insurer to pursue a claim. Why does ELTO exist? ELTO is a proactive move by the insurance industry to meet its obligations to help those who have suffered injury or disease in the workplace to identify the relevant insurer quickly and efficiently. How does ELTO work? At the heart of the ELTO process is a centralised database - the Employers Liability Database (ELD) - which will contain all new and renewed EL insurance policies, old EL policies that have new claims made against them and all successful traces from the current Tracing Service. ELTO s members will be required to supply policy data to the ELD on all new and renewed EL policies in early The ELD will be accessible for claimant searches from Spring What are insurers being asked to do? Any insurer who has, or has had, authorisation to write general insurance in the UK will be required to abide by new FSA regulations on tracing EL policies from early Next Step - What employers will be asked to supply? ELTO has adopted the Employer Reference Number (ERN) as the most effective unique identifier available. This is also commonly referred to as Employer PAYE Reference. UK businesses employing one or more people are required to have the ERN, which is the reference number for their employees income tax and national insurance contributions. A tiny minority of employers do not have an ERN. The only exemption is where the employer pays all their employees below the PAYE current threshold ( monthly) continued >>

4 Each ERN is unique to the employer and will not be replicated. On PAYE records, the format for most numbers allocated since 2001 is NNN/Aznnnnn, where NNN is the 3 digit number for the Tax Office whose catchment area the employer falls into, and Aznnnnn is the ERN, where n is numeric and A and z are letters. For numbers allocated prior to 2001, the format is NNN/Annnnn in the majority of cases. No retrospective changes are made to an employer s ERN. Therefore, even if the employer is taken over, ceases trading or moves tax office, the ERN for a specific point of time is permanent The ERN is printed or written on mandatory documents including the P45, P60, P11/D, and on most payslips. In April 2012, the ERN and subsidiary information will become mandatory. The Insurance Partnership will be reviewing our documentation and processes and will provide you with more specific guidance as appropriate. For further information contact your Account Executive or visit: Source elto.org.uk What is Employers Liability Insurance? Employers Liability Insurance provides you with indemnity should an employee sustain an injury or disease during the course of their employment and seek compensation from their employer. For example if an employee fell from a ladder and sustain serious injuries they could sue the business for whom they were working if they hadn t been supplied with the relevant safety equipment or had suitable training. They may be entitled to compensation which the business would be forced to pay if they don t have this cover in place. << previous

5 IT Time Bomb? Increasingly the hub of today s business is its IT network, used for storing strategic data, trade secrets and financial information, not to mention all the personal information regarding employees and customers. If your business uses , has networked PCs/ laptop, you could have a lot to lose should your business come under cyber attack. Most of us are aware that it is wise to have firewalls, virus protection and anti-spam systems, along with other procedures to protect and prevent employees from downloading dangerous spyware and viruses. But even when these measures are in place they are never foolproof and if they failed could your business cope? When a system fails the most obvious need is to clean up after a virus or a hacker attack. Cleaning and restoring infected files could lead to business being interrupted for several days and could lead to liability issues for allowing copyright material or private information about customers to fall into the wrong hands. Check list for securing your networks: Do you... Have antivirus software? Update the virus definitions? Use a firewall? Conduct regular data backups? Have a well-thought-out disaster recovery / business continuity plan, both in terms of physical security and a data breach event? continued >>

6 As technology evolves, more businesses need to take in to account the amount of insurance that is focused on the traditional plans such as property / errors and omissions, without appreciating what the company is worth in data. It is worth understanding not only what your data is worth to you, but how your IT systems affect your business s bottom line by calculating how much you could lose from a single day of downtime. If you maintain private information regarding employees or customers including credit card details, you will be liable if the information is leaked due to faults in your systems or through theft by hackers or malicious employees. Cyber Insurance has been designed to cover the risks of untangling the mess and loss of business when an IT system goes down or is threatened. Privacy and security liability coverage could also protect you from costly corporate claims from businesses such as banks and credit card issuers. Crisis management will cover costs for restoring lost or corrupted data, and for getting your systems back up and running. Some include public relations coverage to help defray the costs of consultants and advertising to rebuild your reputation after an incident. << previous Business interruption and lost income - Should you lose revenue after an attack or when a service provider, such as a web host, is shut down by a cyber attack, has a glitch or goes out of business. It also helps defray costs of restoring valuable data and repairing systems. Cyber extortion. Extortionists increasingly target small businesses because of their perceived inability to fight back. Cyber extortion policies often cover the settlement and the cost of hiring a security firm to track down the perpetrators. Media or web content liability coverage protects you from charges of libel, slander, copyright and trademark infringement for content, photos, and slogans you use on your web site, and those posted on bulletin boards and chat rooms by visitors. It also covers liabilities associated with banner ads on your site for other businesses. For more information regarding Cyber Insurance please contact: Chris Robinson, Tel: , crobinson@insurance-partnership.com The Insurance Partnership, Partnership House, Monks Cross Drive, Huntington, York YO32 9GZ

7 The Default Retirement Age to End in 2011 The UK Government has confirmed its plan to phase out the Default Retirement Age (DRA) of 65. The relevant regulations will come into force on 6 April 2011 and from 1 October the DRA will be completely abolished. The last date that employers can provide an employee with the 6 months notice required by the DRA provisions is 30 March 2011 and the last date on which employees can be compulsorily retired using the DRA is 30 September Employers will still be able to operate a compulsory retirement age as long as they can objectively justify it; this is known as Employer Justified Retirement Age (EJRA). Employers who wish to use an EJRA need to consider the matter carefully. They must make certain that the retirement age meets a legitimate aim, for example, the health and safety of individual employees, colleagues and the public. It will no longer be acceptable to dismiss an employee on the grounds of retirement unless it is justified. This will be very difficult to do other than in particular professions (such as those requiring significant physical fitness) and will require substantial supporting evidence. An employer may still be able to utilise another statutory reason for dismissal, such as performance or redundancy for example, but only where this is appropriate. Employees may also still choose to retire voluntarily. The phasing out of the DRA could carry with it an enhanced risk of unfair dismissal claims if company practices are not modified in order to accommodate the legislative changes. There are steps that employers can take to minimise such risks by reviewing their existing Performance Management processes and practices. This could be an ideal opportunity to open dialogue with an employee, whatever their age, to confirm that they understand the changes and what impact they may have and to discuss their short term and long term employment plans. This may also identify any training or development needs and provide an opportunity for you to discuss any future work requirements. With annuity (Pension) rates at historically low levels alternative forms of retirement income are becoming increasingly popular another reason to seek financial advice. To find out more please contact The Insurance Partnership Financial Services Ltd on and speak to one of our Pension experts.

8 Safe guarding tenancy deposits Now the Assured short hold rental income threshold has increased, every landlord and letting agent in England and Wales who takes a deposit from a tenant under an Assured Shorthold Tenancy Agreement (AST), must secure the deposit within a recognised government approved scheme. Failure to secure the deposit on a rental value of up to 100,000 per annum will result in a significant penalty (likely to be tens of thousands of pounds) being awarded against the Landlord or the Agent. The tenant is also likely to be awarded legal costs. Letting Agent PI Insurance PI Insurance does not cover these types of penalties and therefore any direct claim by a tenant against the agent will be excluded from cover. Claims via Landlords for damages (where the landlord has had to pay a penalty to a tenant) arising from a breach of duty by the agent may be covered, subject to policy terms. Failing to protect a deposit within a scheme can result in legal prosecution and prohibits a Landlord or Agent from taking possession of the property until such time as the deposit is secured. Any tenancy renewed or made after October 2010 will become an Assured Short hold Tenancy and will be covered by the Housing Act Advice is available regarding these changes. Please contact your TIP Account Executive for further details or visit The deposit must be protected within 14 days of receiving the deposit. The landlord or agent must give the tenant the details about how their deposit is protected including: the contact details of the tenancy deposit scheme selected the landlord or agent s contact details how to apply for the release of the deposit information explaining the purpose of the deposit what to do if there is a dispute about the deposit

9 Key Person Insurance A recent survey conducted by IoD/ Legal & General found that Company Directors are feeling optimistic about the future with predictions of rising profits and fears of a relapse into recession fading. What became clear however is that too many businesses seeking growth, lack vital cover for unforeseen events. Businesses don t think twice to insure their important equipment & buildings. But overlook to insure the most important part of their company, the employees. The death or critical illness of a leading individual is a difficult issue for any business to cope with and, as the range of appropriate insurance products is always expanding, borrowers should be made aware of the possibilities of potentially useful protection. All business owners are aware of the financial consequences that can arise if a key member of staff dies such as loss of customers, turnover and profits along with pressure on business loans that may be more difficult to repay. However by carrying out a thorough audit of the risks and exposures, it s advisable to consider any gaps in a business protection plan that might need plugging. By investing in Key Person Insurance the benefits help the company cope financially without that person anymore. Many large businesses will already have these protection policies in place. But small to medium size companies tend to overlook this insurance or do not even know it exists. It is worth knowing that almost all leading insurance companies offer this Insurance under the Life and Critical Illness policies. Check with your financial adviser to learn the best step that you can take when taking advantage of this type of insurance plan for your business. Source: January 2011: Director Magazine IF A BUSINESS OWNER OR KEY INDIVIDUAL DIES 58% claim not to have a formal agreement to cover this situation 41% have no provision for protecting cashflow 37% think remaining shareholders would buy the business 33% have no provision to protect shares 21% believe that the business would cease to trade

10 Contact Hull Office Partnership House, Priory Park East, Hull, HU4 7DY Tel: Fax: TIPFS Office Partnership House Beverley Road, Hull, HU3 1YE Tel: Fax: York Office Partnership House Monks Cross Drive, Huntington, York, YO32 9GZ Tel: Fax: Leeds Office Prospect House 32 Sovereign Street Leeds LS1 4BJ Tel: Fax: Sutton Coldfield Office 329 Jockey Road, Sutton Coldfield, West Midlands, B73 5XE Tel: Fax: Scottish Office 42/3 Hardengreen Business Park, Dalhousie Road, Eskbank, Dalkeith EH22 3NU Tel: Fax: DISCLAIMER: Whilst we make every effort to ensure that the information contained in this newsletter is complete and accurate, we are not liable for any errors, omissions or misleading statements on these pages. Anything in this newsletter is for information purposes only and does not constitute advice.