Opinion
Statutory Liability Policies and Pecuniary Penalties Crossley Gates and Frank Rose, Keegan Alexander
O
ne of the insurance industry’s best innovations in New Zealand has been the introduction of the Statutory Liability Policy in the 1990s. Even today, more than 20 years later, there is no insurance policy quite like it elsewhere in the world, as far as we are aware. The policy started life insuring criminal fines and defence costs under three statutes only: • Health and Safety in Employment Act 1992 (now the Health and Safety at Work Act 2015) • Resource Management Act 1991 • Fair Trading Act 1986
These three statutes shared the following in common: 1. They are all business focused, and at least two of them apply to nearly every business. 2. Two of them don’t specifically address criminal behaviour but contain criminal offences within them. The third (Health and Safety at Work Act 2015) is poorly recognised for what it actually is: a criminal law statute to reduce workplace injuries/deaths (and reduce ACC’s exposure accordingly). 3. The criminal offences are all strict liability offences. This means the offence is committed by merely conducting the elements of the offence; it doesn’t matter that the offender didn’t intend to do so. For example, an offence is committed under the Health and Safety at Work Act 2015 when an employer fails to take all reasonable steps to protect employees from injury at work, and an injury occurs. It doesn’t matter that the employer didn’t intend to fail to take all reasonable steps. 4. A consequence of this is that the offending can be genuinely accidental from the insured’s point of view (an essential ingredient of all insurance). 5. The offenders are likely to be ‘white collar’ business owners or operators who are usually otherwise law abiding. The news that they are facing a criminal prosecution will often come to them as quite a shock. These factors make the insurance policy attractive to businesses. It is not surprising that the product is now a core feature of most business’ liability insurance suites. Competitive pressures inevitably led to the cover widening beyond the initial three statutes. Civil law versus criminal law Traditional liability policies insure civil legal liability, i.e., the laws that require a person to pay compensation to another person who has suffered loss because of a breach of contract or tort by the first person. 26
December 2021
