Killer dust

The Control of Asbestos at Work Regulations (2002), Regulation 4, came into force in May 2004. It is designed to protect people in the workplace, whether they work in the asbestos-removal industry or in premises with asbestos-containing materials (ACMs).

Asbestos was used widely in buildings in the UK from the 1950s to the mid 1980s. As a lightweight, strong and fire-resistant material, it was incorporated into many building products. However, asbestos has a deadly side effect. It can cause a number of fatal diseases, the best known of which are asbestosis and mesothelioma.

The landmark ruling in Borel versus Fibreboard in 1973 saw the first manufacturer to be held liable for injuries caused by its asbestos product.

Since then, there has been a deluge of claims and it is estimated the ultimate claims cost could be more than $250bn (£139bn).

In the UK, around 3500 people die from asbestos-related diseases every year. The Health and Safety Executive estimates that, from 2010, some 10,000 people will die annually from exposure to asbestos. Traditionally associated with those working in heavy industries, it is believed the biggest threat today is to construction workers and tradesmen such as carpenters, plumbers and electricians exposed to asbestos during refurbishment.

The HSE predicts that more than 500,000 UK properties contain asbestos.

Regulation 4 places an obligation on the dutyholder to manage all non-domestic premises with ACM. The dutyholder could be the occupier of the building, the landlord, the sub-lessor or the managing agent. In many cases there will be more than one dutyholder.

Fred Hucker, development director of Opus Group Insurance Markets, says: "Dutyholders with premises built after 1999 should have a relatively easy job of complying because, after that date, the new use of asbestos-containing building materials was banned. Premises constructed before then will need to be assessed by the dutyholder to record if asbestos is present, its location and condition. A plan then has to be developed to manage that risk, which needs to include measures to protect staff and others. One way of achieving this is to have a physical survey to determine if there are any asbestos materials present in the building."

Regulation 4 also introduces an obligation to co-operate. Any person who has had some dealing in the past with a property in a professional capacity could potentially have a duty to co-operate under the regulations.

Surveys

Building surveys must be carried out by qualified surveyors or inspectors.

Regulation 4 has stepped up demand for qualified surveyors and professional indemnity insurance to meet their needs.

Stuart White, partner of Reynolds Porter Chamberlain, says: "There is a demand for additional cover but many insurers are unenthusiastic about taking the risk on. However, the PI risk should be more attractive as it is more controllable."

White says that PI policies are on a claims-made basis, which means that the policy will pay out only if a claim, or potential claim, is notified to the insurer during the policy period. This contrasts with employers' liability and public liability policies, which are on an occurrence basis, where claims may be brought under a policy written decades ago.

According to White it is important to work with competent insurers, which work within a proper legal framework. For example, The Royal Institution of Chartered Surveyors and the Asbestos Removal Contractors Association have jointly formed the National Individual Asbestos Certification Scheme.

The aim of this is to provide certification for those undertaking inspections under the new regulations.

For RICS, the problem of finding insurance has been twofold, as its membership encompasses both potential inspectors and property managers.

For the inspection side, RICS has formed a joint venture company - NIACS - with ARCA. It provides training and certification by UK Accreditation Service for individuals. The scheme has been negotiated with the insurance industry to provide specific insurance for asbestos inspection work by demonstrating that the training and certification plus the use of standard terms and conditions of engagement mitigates the risk sufficiently.

RICS is also discussing with the insurance industry writing back asbestos cover for members who carry out management plans, but not the inspections, and those who come across ACMs as part of their normal surveying activities.

Enforcement

The HSE is currently taking a soft approach to enforcing the regulations.

It is holding workshops to raise awareness and so far has not carried out any research to find out the numbers of businesses complying. It will conduct checks as part of its ongoing duties regarding commercial premises.

Local authorities are responsible for inspecting shops, offices and leisure facilities.

However, those that do not comply are at risk of not only damaging the health of their employees and those occupying buildings, but could face fines of up to £20,000 or six months in prison.

Andy Fisher, information officer of the HSE, says: "We recognise that, despite an 18-month lead-up period before Regulation 4 came into force, there are some dutyholders that are still not aware of it. The first step is to encourage dutyholders to act and, if they fail to, we will issue legal enforcement notices. Prosecution is always the last resort."

More than half of UK businesses are breaking the law by failing to manage the risks being posed by asbestos, according to law firm Davies Arnold Cooper. It found that 717,000 - or 58% - of the businesses it surveyed had failed to carry out an asbestos assessment on their business premises.

The survey revealed that 37% (or 460,000 companies) of UK firms had not heard of the regulations. Only 7% (or 87,000) of UK businesses maintain a record of where asbestos is located on their premises.

David McIntosh, senior partner at DAC, believes this shortfall in risk management will create wider problems for companies. Many insurers, for example, may find they cannot renew their EL insurance because they do not meet the health and safety requirements.

Hucker argues that the regulations are complex and not always easy for the client to understand. He says brokers have a vital role to play in making their clients aware of their obligations. In addition to contacting clients, Opus has produced an advice booklet.

He says: "Despite several codes of practice and guidance notes by the HSE, the message still does not seem to be getting across. The majority of large corporate companies are aware of their responsibilities and, if they haven't already got a management plan in place for the asbestos in their buildings, they have a developed programme of surveys. However, among small to medium-sized enterprises there is much less desire to find asbestos and a smaller appetite to do something about it."

Hucker adds: "Many companies seem to be prepared to take the risk that they will not get caught by the HSE and that their staff won't be affected by asbestos. In these times of an aggressive culture of pursuing claims, this is clearly a big gamble and not a good way of managing risk."

Gary Chandler, managing director of Jelf Insurance Brokers, argues: "The regulations are relatively easy to comply with as you are only requested to carry out an assessment and make people aware of its presence and you are not specifically having to remove ACM from the building."

Jelf has also had more success arranging inspection with its larger clients.

Chandler says: "As with all types of legislation, a number of clients are slow to react to forthcoming legislation and it could be that a number of cases of business being fined will be necessary to increase the profile and significance of this legislation."

Placing risks

Asbestos-related incidents are specifically excluded from around 90% of PL insurance policies. Unless businesses comply with this new legislation they may also find that insurance companies will seek to recover payments for claims relating to asbestos under EL insurance cover.

The task of identifying asbestos is challenging and, for many firms, will impact on their liability insurances, making cover increasingly difficult to place, according to Mark Owen, technical director of Alexander Forbes Corporate Risk Solutions.

Owen says: "Once a survey has been completed, the employer will have a material knowledge of any asbestos in their premises and this may need to be disclosed on renewal of their cover. Where there is unstable asbestos they may find they face new exclusions."

However, Owen believes that brokers who work closely with their clients will be able to achieve a positive outcome. The starting point is risk management, he says. "Clients need to be encouraged to take the issue of asbestos seriously and implement procedures to ensure any identified asbestos can be safely managed so risk is neutralised or removed completely. Underwriters will be more comfortable writing cover where it is clear that the insured is aware of and actively managing their asbestos risk."

Owen adds: "It is important that brokers explain the implications of the asbestos exclusions that are becoming more prevalent in liability policies. Brokers may also be able to arrange cover that protects their clients against claims from asbestos found accidentally."

Opus has teamed up with risk advisers Cunningham Lindsey Risk Solutions to provide asbestos risk management products. Hucker says: "The regulation has not yet had a major impact on liability renewals. Our experience shows that insurers' attitudes vary in that some are imposing exclusions while others remain silent on the issue. Where asbestos is found - provided the business has followed the guidelines laid down and where necessary remedial action has been taken - we feel the majority of insurers will continue to accept risk."

Brokers have an important role to play in making clients aware of the regulations, encouraging them to take steps to manage risk and in effectively placing that risk.

CONTROL OF ASBESTOS AT WORK REGULATIONS

- The Control of Asbestos at Work Regulations (2002) are in force for all types of asbestos.

- The UK government imposed a legal ban on both blue and brown asbestos and any products containing them in 1986. It banned the use of white asbestos in 1999.

- Chrysotile (white asbestos) has been used most widely, however, amphibole (blue and brown) asbestos is generally recognised as having the greater potency.

- The Health and Safety Executive recently produced a scientific paper, which estimated the risk of mesothelioma and lung cancer by asbestos fibre type for a range of different exposure scenarios. On average, blue asbestos has a risk about 500 times that of white asbestos for mesothelioma and 10 to 50 times as high for lung cancer. Brown asbestos is 100 times for mesothelioma and the same as blue (10 to 50 times) for lung cancer.

- For further information, visit www.hse.gov.uk/asbestos

Source: HSE

MANAGING ASBESTOS

The responsibility to manage asbestos will require facilities managers to:

- Take reasonable steps to determine the location and condition of materials likely to contain asbestos.

- Presume material contains asbestos unless there is strong evidence that it does not.

- Make and keep an up-to-date record of the location and condition of the asbestos-containing material or presume asbestos-containing material is in the premises.

- Assess the risk of the likelihood of anyone being exposed to fibres from these materials.

- Prepare a plan setting out how the risks from the materials are to be managed.

- Take the necessary steps to put the plan into action.

- Review and monitor the plan periodically.

- Provide information on the location and the condition of the materials to anyone who is liable to work on or disturb them.

Source: First Assist.