Silicosis the new Asbestos
Silicosis is a type of pulmonary fibrosis, a lung disease caused by breathing in tiny bits of silica, a common mineral found in sand, quartz and many other types of rock. Silicosis mainly affects workers exposed to silica dust in jobs such as stone masonry, construction and mining. Over time, exposure to silica particles causes scarring in the lungs, which can harm your ability to breathe*.
Australian employers are very familiar with asbestos and asbestos related risks. However, a new equally deadly risk is emerging that they also need to pay attention to. 5 years ago Silicosis was not a term many people would’ve been familiar with. Yet the widespread reach of this disease is extremely alarming and needs to be urgently considered by any relevant employer.
Each state is slightly different when it comes to workers compensation insurance. In Queensland, most employers must purchase their cover from the one option. Workcover Queensland. A state government run entity. For the most part if an employee was to develop this disease they would be entitled to compensation via this avenue.
However, there is much more to consider for how these scenarios play out. Already employers with a silicosis exposure have noticed a dramatic increase in their workers compensation premiums. Some as much as 1,000%. Workcover Queensland has been attempting to reduce their claims loss ratio by instigating recovery action from suppliers/importers of products that may have been contributing towards silicosis. To date this has been largely unsuccessful which has forced Workcover Queensland to review other avenues in which to recover their unaccounted-for losses. To that end recent management changes have shifted a focus towards fining companies and/or it’s directors personally for health and safety breaches. Not only are these business’s paying enormous premiums but are also now under threat from potential impending criminal litigation.
This article is not here to comment on the philosophical conscious of double dipping from workers compensation insurers. It’s merely to shed light on risks and exposures that employers need to be wary of.
There are 2 main insurance policies business owners should review to better understand their own risk strategy when it comes to dealing with silicosis:
Public & Products Liability
For clients in certain industries, silicosis is a major exposure from a public/products liability perspective. You must keep in mind it may not necessarily be an employee of yours that gets injuries relating to silicosis from your product or action. It could be a contractor, customer, or passer bye to your premise.
What we are seeing is liability insurers either:
1. Declining risks which have a significant exposure to silicosis.
2. Putting a total exclusion in their policies for silicosis claims.
3. Putting an exclusion on the policy if the insured is in certain occupations.
If you have an exposure to silicosis, you need to be careful to ensure that the policy covers the exposure. This is particularly the case in Queensland where as mentioned above Workcover are quite aggressive with seeking recovery where they can.
The other thing that needs to be kept in mind is that Liability policies are triggered by personal injury during the period of insurance. Silicosis is usually the result of exposure to silica over a relatively long period. In all of the above situations, there is an issue as to when the personal injury occurs.
The insurers we have access to can usually provide a policy that says that in the event of a personal injury arising from a latent process, the injury occurs when it is first medically diagnosed. This is very generous towards the insured and would be a preferred policy definition to have should it be available.
Management liability policies can offer protection to owners/directors and their business’s across a range of issues including OH&S, statutory liability, employment practices and crime just to name a few. The OH&S and statutory liability sections are particularly relevant when considering the increasing desire from Workcover and other similar organisations to use fines and penalties as a recovery mechanism for their claims costs.
At an insurers discretion they may decide to defend the matter, or they may elect to settle to matter generally with a fine or payout. In either scenario a business with management liability protection can have a level of confidence their policy should respond.
As a director in a business you can’t control how these fines will be leveled against you. They may name just the company in the court document. They may also name the director personally, which for criminal charges would be quite concerning and distressing. The way most management liability policies operate is to pick up and provide cover in both avenues making it noteworthy for consideration. The caveat is that like the above public/product liability market insurers for the management liability product are now starting to carve out or water down these policy sections. To that end it’s important that you are aware of what your policy covers and how it responds to silicosis.
My suggestion would be to speak to your insurance broker, an insurance broker, or us about this issue if you are unsure of your position. Silicosis is a big emerging issue and whilst insurance is only part of a good business’s risk mitigation process it’s a really big part if managed correctly.
This article originally appeared on Norton and Co Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Scott Norton.