As chief engineer at Allianz Cornhill Phil Wright knows a thing or two about health and safety legislation and the importance it has in the insurance world.
Here he discusses the history of engineering insurance and how it has been a big feature of the industry for more than 150 years.
It's not that I am old enough to remember the beginnings but it is something of an irony that one hundred and fifty years after it all began, engineering insurance, plant inspection and safety are again being closely linked.
In the middle of the 19th century and long before there was health and safety legislation in the UK, engineering insurers insisted on inspecting the insured's hazardous plant, particularly their steam boilers for the very simple reason that they had the unfortunate habit of blowing up with depressing frequency. People were killed and factories destroyed and the whole thing didn't add up to a very good insurance risk.
In this way, engineering insurance and engineering inspection have uniquely gone hand in hand in a very complementary manner. Over the decades, the original emphasis had been lost and there exists to this day, a view in certain parts, that engineering inspection is tantamount to another form of government stealth tax.
The law says that plant and equipment has to be inspected so that's it and there's no escape from the cost.
Thankfully, we do live in more enlightened times. Many curse the burden of health and safety legislation but few would argue against the saving of life that has come in its wake. You don't have to dig very far back into our social history to find out just how dangerous and unhealthy the workplace was for the average citizen.
You only have to look at the level of fines being imposed by our courts today to appreciate what our government thinks about workplace health and safety. Then relate those costs to the company balance sheet to realise that good management and good health and safety really are closely linked.
Insurance has always had at its heart, the principal of balancing the risk against the premium. It is unlikely that today, anyone would offer engineering cover if the risks remained as they were in the 1850's.
Brokers looking for the best deals for their clients with engineering plant, equipment or operations could do worse than turn first to the specialist engineering insurers in the market. Particularly those with an engineering inspection arm. It is here that we have come full circle.
Insurance companies are prudent by nature and feel comfortable with good safe risks. And businesses themselves? Good inspection regimes lead to safer plant. Safer plant lessens the fear and reality of prosecution and the risk of loss of production. So as it was at the beginning, safe plant and premises will catch the eye of the specialist insurers, and it is the best of these that should at least be able to put a smile on the face of engineering business.
