The Louise Woodward court case in 1998 pitchforked our awareness of what has come to be known as shaken baby syndrome. Until the story of the English nanny convicted of the manslaughter of the baby in her care hit the headlines, the syndrome was virtually unheard of in the UK.
Similar but unrelated criminal prosecutions have occurred in the UK and the civil claims that invariably followed raise some difficult issues for liability insurers. To understand these difficulties we need to examine the component parts that make up a typical liability insurance claim.
Policy liability in these cases is a tricky issue because “accidental bodily injury” is the operative clause. Legal liability, linked to the enormous responsibility of caring for children as a nanny or for that matter, a parent is equally tricky.
The sum of damages awarded to a young person who has been severly injured are potentially enormous, just ask the defendants in the case brought by the parents of Faisal Luhar this year. It concerned a 10-year-old boy left paralysed in a road accident, unable to breathe without the aid of a ventilator. He was awarded £5.1m at the Birmingham High Court in March.
Prevention must be better than cure for the insurance industry and this is where risk management plays its part. To manage a risk, it must be understood. Some paediatricians view shaken baby syndrome not so much as a rare occurrence, but the tip of an iceberg of unknown proportions.
Now insurers and actuaries (risk calculators) do hate the tip of an iceberg. So does Lloyd's.
Members of the Royal College of Paediatrics & Child Health and some doctors believe that untold numbers of children with learning difficulties may have suffered neurological damage as a result of being shaken.
Insisting on caution
Most injuries are caused to children under the age of two. There is a 19-year limitation period and a child can make a claim for three years after his or her 18th birthday.
Let's be positive. The key, where nannies are concerned, lies with the process of vetting or “checking out” the carer in question.
Unfortunately, a compulsory national nanny register is some way off and nannies are not required to register – an anomaly under the Childrens Act – although childminders have a registration obligation. Even with registration there is much that should be done by the insurance risk taker.
Insurers should insist on a programme of:
The National Childminders' Association is considering opening up its membership to home-based day carers, particularly nannies, and it is their association that figures as prominently as the policyholders on insurers books.
A number of related trends contribute to what may be a growing problem. Nannies are cheap labour caring for a priceless asset. More than 2.7 million households regularly employ help in the home but, while gardeners average £6.46 per hour, those who care for children in the home receive an average of only £3.64. Against this, there is the US-led development of internet nurseries, where parents can watch their children live from computers at work and some growth in the American Doula – a cross between a cook and a mother's best friend.
Insurers must watch these client trends and foster preventative measures or face uncertainty.
So, despite all parties' best efforts tragedy still strikes. It is never going to be easy blending technical issues with high trauma but the insurer must try to be caring and careful in equal doses.
Fine line of duty
Aside from any warranty obligations, insurers should look carefully at the exact circumstances of what happened in the context of a typical liability wording of: “The company will indemnify... become legally liable... to pay damages... arising from... accidental bodily injury to... any minded child.
The line between what may be deemed as deliberate and accidental can be extremely fine and tinged with the well worn perception by the public that insurers are in the business of collecting premiums and avoiding claims. Despite what we all know to be to the contrary, it is probably going to take another 50 years to kill off that old chestnut.
If the policy point were overcome, then insurance technicians would be facing consideration of the duty owed and whether there was a breach. Often, the claim consideration follows a criminal trial which may assist or fudge the issues but the claimant would have to show that the carer failed to exercise all reasonable care when childminding.
So, duty? Breach and the damage caused? The last point could open up yet another area of medical causation. Is it negligent to toss a small child in the air? Is it negligent to jog while the child is on the shoulders? Who hasn't done that?
Injuries may also have been caused in a road traffic environment or by a fall at the home unconnected with the alleged actions of the carer.
The damages can be horrendous. Not untypically blindness, fractured skull, fits, learning difficulties or brain damage. On the subject of frequency there are some frightening statistics. In one study of children shaken to unconsciousness, 60% either died or had profound medical disability, quadriplegia or severe motor dysfunction.
According to the NSPCC, infants under the age of 12 months are four times more likely to be homicide victims than the rest of the population. Three quarters of those infants under the age of two taken to hospital suffer profound disabilities or die.
So what do we have to fear and where do we go?
Catherine Hinds, associate director of Albion Insurance, which, via its insurance brokers, Morton Michel, has a strong profile in this type of insurance market, says: “The increasing demand for childcare has led to a growth in this sector. In today's no win no fee society, this only means more claims against their carers.”
Children have accidents everyday, most of which are nobody's fault. Regardless of this, the carer is the easiest person to blame. It is the insurer's task to gather evidence to assess liability. This needs to be carried out promptly and the information retained until the end of the limitation period.
One difficulty facing insurers is the decision about which accidents should receive a formal investigation, and which should not. An experienced claims handler can usually make this decision, but in an increasingly litigious society, what seems to be an innocuous accident today could result in an expensive claim tomorrow.
Although many accidents do not result in claims it is worthwhile going that extra mile at the outset. It is possible for a period of up to 20 years to go by before a claim is presented. Being prepared at the outset is therefore a prerequisite to avoiding a nasty surprise in the future
Trevor Davies, senior partner of leading insurance lawyers, Davies Lavery, said: “As the UK litigation climate tends to mirror that of the US, albeit with marginally greater sanity, we can expect to see more claims of this type in the future.”
One thing is certain. If the issues of care remain less controlled and risk managed, then the insurance industry should not be surprised if some pretty horrendous claims continue to come out of the woodwork for years to come.