New asbestos regulations in practice – slow progress

Just over six months ago, on 21 May 2004, tough new asbestos regulations (CAWR 2002) came fully into force in England & Wales. This followed an 18-month lead-in period designed to encourage and cajole commercial property owners, tenants and managers to assess proactively the risks from residual asbestos in their buildings. This article assesses what lessons can be drawn from the first few months of the Regulations operation, and suggests what insurers might do to improve their own risk assessments and stimulate greater levels of compliance.

There is an inevitable time lag when breaches of the Regulations lead to criminal prosecution by the Health & Safety Executive (HSE) or Local Authorities. That delay is even greater where civil proceedings (and insurance claims) arise out of the same facts as a party seeks to recoup losses incurred. What follows is based upon the (limited) reported cases since May 2004, with input from various professionals working in the field.

Enforcement action

Between May and October there were just over 70 enforcement notices issued for breaches of asbestos regulations¹. As in previous years, the majority of these were in the construction and demolition sectors. Asbestos containing materials were widely used in buildings throughout the last century (until 1999) and any construction or maintenance activity undertaken without a suitable assessment or survey can lead to dangerous uncontrolled fibre release.

Whilst levels of enforcement are consistent with those previously, fines and remedial costs continue to increase steadily. The following are a sample of prosecutions reported in the last six months:

Carpet company in Worcester fined £100,000 after temporary staff was exposed to highly dangerous brown asbestos within wall cladding. (A further £160,000 was spent on the clean-up operation);

Demolition firm in the Midlands fined a total of £245,000 (and director disqualified) after employing unprotected workers to remove asbestos materials from a factory site;

TV production company in London (and its property managers) fined a total of £18,000 for failing to detect and remove pipe lagging containing asbestos, exposing 140 staff².

Insurers are duty-holders in their own right due to the large number of properties that they own or occupy. However, their main exposure to the current regulations (as distinct from historic long-tail personal injury claims) will be from civil claims and disruption of business activity after the discovery of asbestos, caused by buildings or sites being shut down possibly for months at a time. The majority of the 70 notices referred to above were Immediate Prohibition Notices; that is, work stopped until the extent of the exposure, tests and clean-up were completed.

Increased awareness

An extensive campaign by the HSE and trades union has undoubtedly increased awareness amongst organised workforces. This is reflected in the way in which many of the reported cases came to light. Often this is because an individual labourer or site foreman – fearful for their own safety – insists upon laboratory tests to identify suspect material or calls in an inspector.

Whilst there is generally good awareness of the new Regulations amongst property managers and professionals, actual compliance is 'patchy', the more so (as with all such regulation) amongst smaller firms with older properties and less resources; i.e. where the risks are greatest.

Conclusions

There has been no massive upsurge in prosecutions and claims, as some had feared. However, Insurers will need to maintain vigilance in this developing area. The widespread use of exclusions, limitations and increased excesses is likely to continue for several years until a reliable statistical base exists for the operation of the new regime. For Insureds operating in high-risk sectors (construction, demolition and associated professions), the claims record pre-dating May 2004 may be a useful guide to risk but the scope of changes to the Regulations means that actual current practice is the best measure. Greater use could be made of CAWR-related questions in proposal forms; scrutiny of an Insured's standard documentation; and cross-checking with the list of offenders on the HSE website. In that way the worst risks are likely to be avoided, with the additional benefit of improved compliance.

For further information on this subject, please contact Simon Chandler at [email protected] or on +44 (0)117 930 7816.

This article first appeared in Insurance Day in December 2005.

¹ HSE enforcement website (as at 14.12.04)

² Daily Mirror (02.12.04)