This is a Fine Situation We Have Got Ourselves Into ...


Public Liability insurance indemnifies the insured for sums they become legally liable to pay by way of compensation or costs in respect of personal injury or property damage caused by an occurrence within the period of insurance.  Critical to a claim being successful is legal liability on the part of the insured, meaning that the insured needs to have been negligent i.e. have breached their duty of care.  No legal liability - no claim.  The cause of the increase in public liability insurance premiums is this - too many claims for legal liability (e.g. breach of duty of care) are being made.

Some could argue that insurers, by agreeing to settle claims prior to a court making a legal determination, contribute to this problem.  There is some truth in this argument.  Due to the uncertainty of a courts likely decision and considering the high cost of legal defence, an insurer will make a commercial decision as to whether or not to expose themselves to the risk of defending a claim and losing.  Whilst their point of view is perhaps understandable, a legal judgment could provide valuable guidance for similar claims in the future.

This article has mentioned previously trends in litigation, and there is no doubt that people within our society are more inclined to pursue legal compensation today than applied in years gone by.  Suggestions as to why this is the case are readily put forward and include the necessity for consumer protection.  The no win no fee situation that legal companies now promote, even via the expensive medium of prime time television advertising, is often blamed and it is difficult to dismiss this as a contributing factor.

Page  2

The fact is people are willing to seek compensation via court action, even against not for profit organisations and volunteers who are truly trying to make a contribution to society by providing a facility for the betterment of the community and those within it.  The expectation of a person to make a considered judgement and determine whether or not they are prepared to voluntarily assume a risk to participate in an activity seems to have significantly changed over the years - at least in the eyes of the law.  Personally I agree that the rights of the consumer must be protected, and perhaps it was necessary for the pendulum to swing back a little, but based on recent court decisions, some of which have been covered in previous editions of the IEA Sport Monthly Update, I suggest that the swing has gone a little too far the other way.  It will be interesting to see if the current problems being experienced lead to future legal decisions reflecting change in the views of the courts.

Due to the problems outlined such as events being cancelled and organisations going out of existence because of the cost and availability of insurance there is some discussion taking place regarding new legislation to address the current situation.  This is encouraging, however legislative change does not happen overnight and, even apart from the time factor, should not be seen as the complete solution to the problem.  Again I reiterate, if there is no negligence issue there is no legal liability.  The well-worn term Risk Management has a vital role to play in not only preventing litigation but in ensuring safe and enjoyable participation in sport, recreation and community events.

Continued ....