Statutory Liability Insurances – are you covered?

Statutory Liability Insurances – are you covered?

Serious harm incident

In 2018 we dealt with a serious harm. The scenario was that a digger operator and a spotter were working on a residential construction site. Their job was to prepare the narrow driveway for a retaining wall.

The lads needed to change the digger attachment and in doing so, the operator decided to work the controls from outside the cab by standing on the tracks. The end result is that the operator knocked the slew lever pinning the spotter against another retaining wall and crushing his pelvis.

Yes, there were a number of failings and WorkSafe rightly decided to investigate.

WorkSafe, Insurers and lawyers

The insurance broker was contacted who in turn spoke with the insurance company who appointed a solicitor. Please note that the solicitor acts for the insurance company to minimise their losses. Yes, they act for the employer as well but the insurance company controls the decisions, not the employer.

During the investigation it became clear to WorkSafe that the digger operator made bad decisions. So WorkSafe decided to investigate him as well.

It is fair to assume that employees expect to be covered under their employer’s insurances in this regard.

When we approached the insurance broker regarding this there were no clear protocols in place for how to deal with this. We found this a wee bit surprising. The insurance company equally seemed unsure of how to deal with this.

After a bit of deliberation the insurance company decided to cover the employer. A separate solicitor was appointed for the employee.

This seems fair however came with a number of significant challenges.

Conflict of interest

The insurance company pays the cost of both solicitors. Each solicitor has to represent their client (insurance company) and its client (employer / employee). Given the solicitor’s role is to minimise the cost of the claim, they will most likely have opposing views.

The first challenge is that there is a blatant conflict of interest. The same insurer is funding two opposing positions all sitting under an insurance policy owned and paid for by the employer. Depending on the circumstances the employer could be significantly disadvantaged in this position.

The solicitor will instruct their respective clients not to discuss their individual cases (to remove another conflict of interest). So now we have an employer employee relationship that is filled with friction given the parties cannot discuss the incident. This challenges the employer employee relationship and it also challenges the work being done in health & safety. The latter requires worker participation and given there have been failings, not being able to have open dialogue really challenges this.

In our client’s case, WorkSafe decided to withdraw and not prosecute. They did this at day 359 from the 365 days they have available. A great outcome and mitigated a real potential issue with the particular employee who was the operator.

That said, this case is not isolated and will continue to come up.

How would you deal with this?