Costs may not be covered by insurance policies

Criminal prosecutions brought under the Control of Asbestos at Work Regulations 2002 more than tripled last year to 37, said City law firm Reynolds Porter Chamberlain LLP (RPC).

In 2003/4, after the 2002 rules came into force, the Health and Safety Executive (HSE) launched seven criminal prosecutions. This rose to 12 in 2004/5 but jumped to 37 in 2005/6 – the most recent year for which statistics are available.

Nick McMahon, specialist health and safety partner at RPC said: “The rapidly increasing number of criminal prosecutions under the 2002 rules - more than tripling in just one year - is a clear indication that all businesses, not just those in the highest risk industries, need to sit up and take notice of the asbestos issue. The HSE appear to be making full use of the enforcement tools at their disposal to clamp down.

“This is a serious issue for businesses and their individual directors. Not only is the threat of a criminal conviction bad enough in itself, bringing with it the potential for severe damage to a company’s reputation from adverse publicity, but there are also important insurance implications over the costs involved.”

He explained that while damages and costs in civil cases involving asbestos will often attract liability cover, this is not always the case.

"Some insurers regard asbestos as such a high risk that they exclude it from cover entirely. Even if cover is available, policies will not meet fines or penalties imposed in criminal proceedings, only defence costs incurred with insurers' approval. The financial burden can be high.

“Some fines are far heftier than others, but on top of that legal costs can often be substantial. In addition to ensuring they are complying with the regulations, companies and their directors should check their policies carefully to ensure that they are properly covered against the cost of answering a criminal investigation or prosecution.”

The average penalty for health and safety convictions in 2005/6 was £29,997. This included several fines of over £100,000.

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