- Aim of this guidance
- Why this is important
- An overview of the insurance issue
- Don’t fall for the myth
- Your role as an employer
- The general approach of insurance companies
- Charities and insurance
- Individual cases – if in doubt, check with your insurer
- Issues should be limited to those unspent convictions only
- Insurers that can help
- Are you having problems?
- Good practice tips
- Frequently asked questions
- Useful resources
- More information
- Has this been useful?
Aim of this guidance
This guidance is to support you in understanding what, if any, insurance issues you need to think about when recruiting people with criminal records.
Why this is important
- There’s normally not a problem – It’s a common myth to think that employing people with criminal records will cause problems for your insurance
- It can sometimes get in the way – Concern about insurance issues can sometimes mean that employers, particularly smaller ones, are reluctant to get involved in taking on people with a criminal record.
- You might need to take some reasonable steps – To be confident, there are some steps that you can to take.
An overview of the insurance issue
With most employer-related insurance policies, you are asked to provide the details of the directors of the company. If any directors have ‘unspent’ convictions (under the Rehabilitation of Offenders Act 1974), you will normally be asked to declare these as part of the policy.
When it comes to members of staff (and/or volunteers), you are not generally asked, or required, to provide their personal details to your insurers.
On the 12th August 2016, the Insurance Act 2015 came into force. It applies to all commercial insurance contracts and has been described by the UK government as ‘the biggest reform to insurance contract law in more than a century’. Part 2 of the Act creates a new ‘duty of fair presentation’ aimed at encouraging active (as opposed to passive) engagement by insurers, as well as clarifying and specifying known or presumed to be known matters. There’s a helpful analysis of this on the Out-Law website.
Previously, insurance law was underpinned by a principle of utmost good faith. Generally, this meant that you, as the proposer, needed to volunteer any information that a reasonable insurer may have regarded as a material fact. This included any circumstances that could (a) affect the insurer’s willingness to insure a particular risk; and (b) cause the insurer to charge a higher premium, or alter the terms of the policy. On this basis, most insurers might have expected that an employer would disclose to them the fact that an employee had unspent previous convictions, if they’re aware of them as an employer.
Under the 2015 Act, employers are required to disclose sufficient information to put an insurer on notice that it needs to make further enquiries about potentially material circumstances.
Don’t fall for the myth
It’s a common myth to think that employing people with criminal records will cause problems for your insurance. There are lots of case studies of employers who have recruited people with convictions and haven’t encountered problems with their insurance.
Your role as an employer
When looking at developing your organisational approach to recruiting people, you play a significant role in making suitability decisions based on various factors, not just on whether the applicant has an unspent criminal record.
Many employers that proactively recruit people with criminal records do so without notifying their insurers each and every time they take somebody on. This comes from the fact that they make judgements on a case-by-case as an employer, in line with what their insurers would expect of them.
The general approach of insurance companies
Most insurers don’t expect organisations to notify them of individual recruitment decisions, and it is unlikely that your insurer will judge that the convictions of a small number of individuals causes your policy problems.
Unlock recruits staff, volunteers and trustees that have a range of convictions. We’ve been with our current insurers for years. Each year, we get confirmation that they’re happy to cover people with unspent convictions. We don’t provide the specific details to them – we consider that as part of our own internal recruitment process.
However, we’ve come across a small number of insurance companies where they’ve said that they’re unable to insure employers who hire people with unspent convictions. SO it’s important to check your insurers’ approach to this.
Generally, the Insurance Act 2015 requires employers to disclose sufficient information to put an insurer on notice that it needs to make further enquiries about potentially material circumstances. In this context, this could mean that an insurance company would expect you to nofify them that you’re employing people with unspent convictions. It would then be up to insurer to decide whether to make further enquiries.
Charities and insurance
It is common for charities to be looking to recruit people with convictions across all levels of the organisation.
In principle, the rules are no different for charities as they are for other organisations. However, specific policies for charities might vary, and may have some standard conditions in their policy, like the example below.
The example above is for employers’ liability and has standard wording that directors, partners, trustees or committee members don’t have unspent convictions. When we asked them what they’d do if a charity had someone that did have an unspent conviction, they said they would simply place an endorsement on the policy overriding it. They noted that the situation would be slightly different for trustee indemnity cover, and in that situation they’d need the details of the unspent convictions of the trustees, but that they wouldn’t expect there to be any problems.
Declarations should only relate to unspent convictions
Insurers will often ask for declarations. For example, for trustee indemnity insurance, trustees may be asked to make a declaration in relation to their criminal record. The example below is one where the declaration is misleading because it doesn’t make it clear that spent convictions should not be considered for insurance purposes.
Instead of the above, we would recommend wording along the lines of:
“I confirm that I have not been convicted of a criminal offence in the last [x] years that is still unspent under the Rehabilitation of Offenders Act 1974”
Regardless of the wording, individuals completing such declarations are allowed to treat them as only relating to unspent convictions. So, if their conviction is now spent, they would be able to complete the declaration.
Individual cases – if in doubt, check
If you’re employing a particular person with unspent convictions and you’re concerned that it might cause you insurance issues, you should check with your insurer.
Although there is no quantitative research on this, our experience suggests that most insurers will be happy to continue covering you in the same way they are currently.
However, insurance companies will assess each case on an individual basis. They may ask for more information – such as the type of offence which was committed, the length of time which has passed since the offence and the nature of their role in your organisation.
In practice, it is unlikely that your insurer will judge that the convictions of a small number of individuals causes your policy problems.
Very often, there’s no difference. They’ll just make a note on your policy.
Issues should be limited to those unspent convictions only
You don’t need to disclose spent convictions to insurers. For most roles, you won’t even know if your employees have got a spent conviction.
The Rehabilitation of Offenders Act 1974 (ROA) applies to all types of insurance. That means that if an applicant’s criminal record is spent under that law, there should be no issues with insurance – and you shouldn’t disclose any spent convictions to your insurers.
That’s the case even if the role itself is exempt from the ROA. For those roles, even though you might know about their spent convictions, you shouldn’t pass this information on to your insurers. Indeed, if you do, it could cause you problems under data protection legislation.
For this reason, for the rest of this guidance we refer to insurance for ‘people with unspent convictions’, which is where some employers come up against issues.
In short, you only have to share unspent convictions with your insurer.
Insurers that can help
This section is for if you’re having issues with getting insurance to cover people with unspent convictions that you want to (or currently) employ.
Unfortunately, there’s no ‘official list’ of insurers that will provide cover to organisations that employ people with unspent criminal records, although some of the brokers Unlock suggest to individuals for personal insurance might be helpful.
Most of the time, we find that existing insurers will be open to having a conversation. At the end of the day, they want to keep you as a customer.
The temptation might be get a one-off policy for specific individuals. However, they will very often be more expensive and have high amendment charges. This can cause problems if the person that the policy relates to leaves.
A fidelity bond, or fidelity guarantee insurance, is a form of insurance that organisations can purchase to protect themselves against loss of money or property caused through the dishonest acts of employees.
There is the ability to obtain a specific fidelity bond where you have standard fidelity-guaranteed insurance that excludes cover for employees with a criminal record. Each bond is issued to cover a named employee within a specified post. The total cost of insuring a staff member varies depending on the amount of cover required. A basic annual premium of £50 can normally provide cover of about £10,000.
This is not a type of insurance that we normally suggest to employers.
Are you having problems?
If you’ve followed our advice here but are still struggling to overcome insurance issues when employing people with criminal records, please get in touch.
Good practice tips
- Check your current policy – See if it has any details about what you should do if employing people with unspent convictions.
- Speak to your insurer – If in doubt, have a conversation with your insurer and explain the situation
- Get confirmation of what you’ve told them – Very often, insurers will be happy for you to use your judgement about who you employ – they’ll simply make a note on your policy of what you’ve told them. Ask them to send you a copy of this.
Frequently asked questions
This section will be added to over time, responding to the common questions we receive about this guidance.
As part of this site, we also have guidance for insurers – although it’s mainly focused at how insurers deal with personal insurance (for example, home and car insurance) the principles are broadly the same for how insurers should work with employers.
Unlock’s website for individuals provides guidance on buying home and car insurance with a criminal record.
- For further advice about this guidance, please contact us.
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