Law firm warns of effects of new corporate killing laws

Brokers must re-evaluate all employers' and public liability policies ahead of the passing of the Corporate Manslaughter and Corporate Homicide Bill, leading legal experts have warned.

Sources said the cover should be re-examined in 2007 to ensure customers have adequate protection against potential corporate manslaughter charges.

The warning comes after the Bill received its second reading in the House of Commons last month.

John Heaney, UK specialist commercial underwriting manager at Hiscox told Insurance Times: "A broker will have to make sure that somewhere within the policyholder's portfolio [whether that be employers' liability, public liability, managed practice liability or a D&O policy], there is adequate cover."

Heaney said it would also be important to ensure that the policy had individual limits to cover various scenarios instead of aggregated cover, which could leave the client short of protection in defending corporate manslaughter allegations.

The Home Office has predicted an increase in the number of corporate manslaughter prosecutions from one case a year to "between 10 and 13" when the Bill finally becomes law.

With the frequency and intensity of investigations also expected to rise, City law firm Reynolds Porter Chamberlain (RPC), has warned against complacency.

Nick McMahon, partner in RPC's health and safety team, said: "Without the option of jail sentences under this legislation, there might be a greater tendency for courts to impose severe fines, which are potentially unlimited under the new Bill.

"Add in the potentially significant legal defence costs involved in these cases and the possible cost to businesses and their insurers increases even further."

RPC has also urged both insurers and insureds to review existing insurance cover and health and safety procedures, as provisions introduced by the Bill will make it easier to charge a company with an offence. The Bill is likely to be passed by July next year.