Public Safety Should Come First

In January, Occupational Health and Safety Authority CEO Mark Gauci drafted a report on permits issued for public events, suggesting a new health and safety body coupled with insurance policies in certain cases.

The Malta Insurance Association strongly supports the government’s aim in strengthening public health and safety during public events. The association agrees that there are many legislative weaknesses and inconsistencies in the regulation of public safety. Insurers also welcome the fact that this Preliminary Report recognises the need for improving standards and the need for requiring insurance coverage for such events.

To date, public events remain very limitedly regulated and event organisers have little to go by when it comes to ensuring the safety and security and efficient risk management of public events.

Establishing higher standards is, however, no panacea for the avoidance of accidents. Better regulation must come hand in hand with a real and effective implementation of such standards.

It should be kept in mind that the availability and affordability of any liability insurance will very much depend on the effectiveness of such risk prevention measures. Terms for such insurance cover will very much reflect the risk-mitigating impact of any newly implemented prevention measure. Insurers will align insurance terms and premia to the average severity and average frequency of similar risks. Such alignment would take account of claims history, industry data and any other relevant information. A policy of insurance would also contain terms and conditions, that are specific to each insured risk, and which reduce moral hazard – that is to say the tendency of a policyholder to apply a lower level of caution once the risk is transferred to the insurer. Such underwriting terms and conditions would enable insurers to design products that match the risk level of their customers.

This implies that there will not be any one uniform insurance solution for similar public events, and that any insurance cover will include excesses and limits of liability which are appropriate to the specific risk profile and the undertakings and warranties provided by the policyholder.

Consequently any insurance requirement should respect risk-based terms and pricing, as these would encourage risk-reducing behaviour by inducing policyholders to take on prevention measures in exchange for negotiation on the terms and conditions of the insurance policy.

The association agrees with the report that the Occupational Health and Safety Authority Act applies solely in connection with employment. Although there are relationships between occupational safety and public event safety, yet insurers would disagree with a presumed fault regime or the inversion of the onus of proof.

Any new regulatory regime should represent a first basic step in improving current standards: there should be no artificial presumption that a public event organiser is at fault – unless it is shown that he has failed to comply with the new standards.

While drawing the attention of the authorities to the above basic principles, the association supports this initial scoping exercise and looks forward to engaging with more specific comments once the government’s detailed recommendations are made known.

Adrian Galea is the director general of the Malta Insurance Association.
As reported on the Business Observer dated 10th March 2016