Legal Experts Warn of ‘Perfect Storm’
 
Welcome to our second midwinter newsletter, despite the fact the days are actually getting longer. For our discussion this month, I would like to cover the two new legislation changes which have major implications for businesses. Legal analysts have described these as “the impact to a ‘perfect storm’”.
 
Neil Beadle & Crossley Gates, partners at DLA Piper New Zealand, appeared at a recent Risk Rendezvous conference in Auckland. The theme: Changing Market Dynamics. There they discussed two changes to the following laws: Healthy & Safety Reform Act 2015, & Sentencing Amendment Act 2014, both of which I have written about in previous newsletters.
 
One of the main changes concerning the Health & Safety Reform Act 2015 is the change in personal responsibility for officers in business. Officer will mean ‘a person occupying a position which allows them to exercise significant influence over the magnitude of a business’.
 
“So in big organizations it may not necessarily be the directors of a company, but regional, branch, country, or site managers; & these people may also fall into this officer definition”. New risk exposures arising from the legislative change includes the new duties imposed on not only employees but also manufacturers, importers, designers, installers, suppliers & instructors.
 
“There are all sorts of rules now about making sure we do not inhibit Health & Safety at work which has given rise to new criminal offences. And a big thing is a six fold increase in penalties.” While fines cannot be insured, defence costs & compensation for victims can be.
 
With these directors & officers having more personal responsibilities & broad-ranging professional roles, it will affect lawsuits & courtroom proceedings greatly. “We will now have these new offences, & huge new fines, so I think there will be a bit of a focus on whether people defend or plead guilty because let’s face it; if the fine is going to be $600,000 person, some people will say ‘I would rather roll the dice & go to trial’”.
 
“So there is a big impact on the approach by Insureds in terms of having cover under their policy. And this means the policy is probably worth more.”

With the Sentencing Amendment Act 2014, when a person has been prosecuted, convicted and sentenced in a court of law, the court are also charged with considering civil reparation to the victim.
 
There are three types of compensation payable in this instance: property damage, physical injury, emotional harm & the resultant damage of those. The latter would be covered by ACC for physical injury. However there is a grey area of difficulty in whether reparation sentences ought to ‘top up’ ACC.
 
And so it would seem, then, a judge may have “a whole lot of discretion”. One such discretion is the court must take into account an offenders ability to pay, & in the case of an insurance company, it may sway a judge’s decision further still.

Perhaps there is an element of pessimism in this speculation. However these notions could very well forecast the reality of the decisions by the court to more & more often act in favour of the victim. And there lies the ‘perfect storm’.
 
How does this relate to insurance?
 
With businesses more at risk, comes the potential for more costly claims. This in turn has an increased risk potential, equaling higher premiums & possibly higher future excesses.
 
I believe it is our role to inform clients of their risk exposure, & potential cover shortfalls which may require changes or reviews.
 
I hope you have found this newsletter informative.
If you would like to discuss anything covered here, please get in touch, myself or Carla will be happy to assist. I trust you are all staying warm in these colder months. My best wishes.