§ Jim Sheridan (West Renfrewshire)I beg to move,
That leave be given to bring in a Bill to prohibit employers from benefiting from the death or illness of employees as a result of group insurance policies taken out without the employee's consent.This Bill aims to regulate group personal accident insurance, otherwise known as dead peasants' insurance. May I begin by congratulating the Scottish press on highlighting this sharp practice and, more so, the Scottish Trades Union Congress on its support and advice in preparing the Bill.There are many disturbing aspects to group personal accident insurance, and none more so than employers being able to take out life insurance on their employees without the knowledge or consent of that employee or their family. Employers can then cash in the policy when the employee dies and keep the money for corporate coffers.
Group accident cover includes compensation for death, loss of limbs and so on, and explicitly states that the company may be the sole beneficiary of such a policy. That appears to suggest that a company can be the beneficiary of a policy when an employee has died or lost a limb without them or their family ever having realised that the policy existed. The criteria for compensation would appear to be attached to the loss that the individual will suffer rather than that of the firm. If that is the case, it is entirely inappropriate that the company should he the beneficiary.
That begs the question: how is compensation for the loss of a limb by an individual reconcilable with compensating the company? I may be old-fashioned, but I find it obscene that employers can profit from the death of their employees. It also has the potential to undermine safety at the workplace. What is equally concerning is the ambiguous position that surrounds any direct or indirect tax exemptions for companies that indulge in this immoral practice. I hope that this Bill, if successful, will flush out those companies that participate in such a scheme, and legislate against the practice.
To date, it has been extremely difficult to establish detailed facts relating to which companies are exploiting this system due to their reluctance to volunteer any information, although it is estimated by some industry insiders that those types of policies account for 30 per cent. of the life insurance market. Indeed, a study carried out in 2002 for Royal Sun Alliance by Continental Research found that nearly half all midsized or smaller UK companies take out such policies or similar ones, such as key-man insurance policies, which are targeted mainly at chief executives.
The clandestine practice has been imported into the UK from America, where there is anecdotal evidence of corporate profit being made from the untimely deaths of employees. For example, a young man in America died of AIDS, and although his employer received more than £200,000 in death benefits, his family did not receive a single penny—or cent—from the company. The major cases that are being pursued in various states in America 191 against dead peasants' insurance centre on the tax situation regarding the schemes. It is possible, in some states, for the premiums to be tax deductible, even if there is a corporate beneficiary. The situation in the UK is, at best, unclear. There appear to be circumstances in which premiums could be tax deductible, but I am unable at this point to be more specific about something that is fraught with complications.
The implications of the schemes for health and safety in the workplace are more important. It could be argued that it is unrealistic to propose that the existence of such policies has a direct link to undermining health and safety at work in the UK, although such a link has been made in America. However, companies are allowed to choose whether the policy should be confined to covering accidents at work or accidents that happen anywhere.
A more direct link can be made with best practice culture. The trade union movement rightly argues that the best care of employees is of benefit to both employees and employers. Any insurance policy that mitigates the damage to the employer of not following best practice should be viewed as highly suspect.
The Bill would not stop good employers taking out life insurance for their employees, but it would provide that they should ask for the consent of employees and their families beforehand. The policies should not be a vehicle for making profits for a company.
Like the Government, the whole trade union movement and I want British business to invest in best practices for staff development and consultation, health and safety and effective management structures. Group personal accident insurance will make no positive contribution toward that, but it has the potential to undermine employee confidence.
Question put and agreed to.
Bill ordered to be brought in by Jim Sheridan. Mr. John Lyons, Jim Dobbin, Anne Picking, David Hamilton, Mr. Siôn Simon and Mr. John MacDougall.