As we recently watched the devastating effects brought about by the recent prolonged inclement weather on our television screens, we can only sympathise with those whose homes and businesses have been badly affected by the relentless floodwaters. However, normality is not resumed once the news cameras and waters retreat, far from it in fact, further heartache and disruption must be endured as the mad scramble to commence the monumental task of reinstating each property as quickly as possible gets underway. Plaster must be hacked off and new applied, timbers and skirtings replaced, electrics reinstalled and flooring re-laid to name but a few but how is insurance work on such a scale managed with respect to health and safety?
It is common for insurers to engage agents such as surveyors and loss adjusters to programme and manage reinstatement works but the under the Construction (Design and Management) Regulations 2007 (CDM) the Insurer may actually be deemed to be “the Client” and as such must discharge the duties that the role attracts. Whilst some insurers appreciate this and have in place a good system of managing their responsibilities, others do not and wrongly assume that the responsibility automatically rests with either the policyholder or their appointed agent who may project manage reinstatement work on behalf of the Insurer.
Where an insurer agrees a cash settlement with the insured, the insured would arrange the works and as such (unless they are a domestic client; i.e. not a commercial premises or a landlord for domestic properties) would become the Client and rightly attract the associated legal duties. This is also true where the policyholder arranges the work and the insurer reimburses them. However, where the insurer effectively funds the work (and therefore can exercise some form of control over it) or arranges for construction work to be carried out under the terms of an insurance policy, the insurer is the Client. Furthermore, if the insurer specifies designers or contractors for certain aspects of the work, then the insurer is responsible for establishing that they are competent. This is no mean feat when managing numerous single projects such as the reinstatement of flood damaged properties on the scale of the situation that continues to unfold in the south of England.
In order to ensure that they adequately discharge their duties, insurers should draw up a robust system to manage the process. Careful consideration needs to be given to appointments such as designers, contractors, CDM Coordinator and Principal Contractor (where an individual project is likely to exceed 30 days in duration or involve more than 500 person days) not to mention who is best placed to arrange the work and influence most control over it (and therefore take on the role of Client). It may be that parties come to an agreement and formally declare who is best placed to act as Client but if it is to be the Insurer’s “agent” the Insurer needs to be very careful what influence it chooses to exercise as the responsibilities can easily come back to haunt it.
In reality these processes, so straightforward on a new build or a traditional refurbishment project, become extremely greyed in insurance work. At times like these, whilst insurers may be familiar with the application of CDM, their agents may not, and the added Government and public pressure to process bulk claims quickly can lead to CDM not being properly addressed. In the event of a serious incident during a reinstatement project, if an insurer is identified as the Client, they will inevitably be drawn into any Police or HSE investigation in order to identify their level of control and decisions they have made such as competence of contractors etc. We are yet to witness an Insurer falling foul of the HSE but it is a very real risk. Insurance companies are well advised to engage the services of a health and safety advisor/CDM Coordinator to assist them in ensuring that health and safety is planned, integrated and managed throughout the entire process; making the correct decisions in terms of appointments, competence, application of additional parts of CDM where a project becomes notifiable, that the insurer is discharging any legal duties and ultimately that the risk of injury to those carrying out construction work on its behalf is minimised.