Recruitment Agency Insurance
Recruitment supplies people rather than advice. This creates important employers' and public liability considerations. A temporary worker on assignment is usually the agency's employee, paid by the agency, while working under somebody else's instruction on premises the agency has never seen.
That produces two exposures at once. If the worker is injured, the claim is against their employer, which is the agency. If the worker injures somebody or damages something, the agency can be vicariously liable for what they did. Neither is a professional indemnity matter, and both are larger than anything the placement fee justifies.
The advisory exposure is about checks rather than judgement. Right to work documentation, qualifications, registration, references and criminal record checks are the agency's responsibility, and placing somebody unvetted into a school, a care home or a regulated role is the claim that follows the agency for years.
We can advise recruitment agencies on the employers' liability and vicarious liability position for temporary workers, professional indemnity for the placement process, and the candidate data exposure that comes with holding thousands of CVs.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Injury to a temporary worker on assignment
The worker is normally your employee, so the employers' liability claim is yours even though the site, the equipment and the supervision belonged to the client. Recovery from the client depends on the terms of business agreed before the assignment.
Vicarious liability for what a temp does
A supplied worker who injures somebody, damages plant or causes a loss can leave the agency liable for their acts. Clients increasingly require the agency to carry cover for exactly this, at limits that reflect their own site risks.
Vetting, references and right to work
Placing somebody whose qualification, registration or right to work was never properly verified. In regulated settings such as healthcare, education and care, the consequences extend beyond the client's loss to the agency's licence to operate in that sector.
Candidate discrimination claims
Claims from candidates rather than clients, alleging discriminatory screening, advertising or selection. They are brought against the agency directly and are increasingly common where automated filtering is used.
Candidate data
An agency holds CVs, identity documents, bank details and references for people who never became employees. It is a large volume of personal data held for a long time with no ongoing relationship to justify it.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Employers' liability
Legally required, and the primary cover for an agency supplying temporary workers, because those workers are usually your employees while on assignment.
- Covers temporary workers on assignment
- Legally required
- Statutory minimum limit
- Declare the trades supplied
Public liability and vicarious liability
Injury and damage caused by supplied workers, and by the agency's own activities. Client terms frequently specify the limit, and industrial or construction clients specify high ones.
- Acts of supplied workers
- Damage to client property
- Limits often £5m or £10m
- Required by client terms
Professional indemnity
Claims arising from the placement process itself: failures of vetting, verification, referencing and advice on suitability.
- Vetting and verification failures
- Right to work checks
- Unsuitable placements
- Candidate claims
Cyber and data
The candidate database, identity documents and payroll information. A breach here exposes people who are not your clients and never worked for you.
- Candidate database
- Identity documents held
- Breach notification at volume
- Ransomware and restoration
Crime and fidelity
Payroll fraud, fictitious workers and theft by staff with access to payment systems. An agency running large temporary payrolls moves significant money every week.
- Payroll fraud
- Theft by employees
- Fraudulent payment instructions
- Relevant at payroll volume
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Split between permanent placement and temporary supply, by income
- Sectors supplied, with construction, industrial, healthcare, education and driving stated separately
- Number of temporary workers on assignment at any one time, and the weekly payroll
- Vetting procedures: right to work, references, qualifications and criminal record checks
- Whether workers are supplied into regulated settings
- Terms of business used, and whether client indemnities are obtained
- Volume of candidate records held and the retention policy
- Claims and notified circumstances over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Temporary versus permanent
A permanent recruitment business is a light risk. A temporary supply business carries employers' liability and vicarious liability for every worker on assignment, and is rated on an entirely different basis.
Sectors supplied
The main driver on the liability side. Construction, industrial, driving and healthcare placements are rated far above office and professional supply.
Vetting process
Documented, consistent checking with records retained per placement is the control insurers look for, particularly where workers go into regulated settings.
Candidate data volume
The size of the database and how long records are kept drives the cyber element, because notification costs scale with the number of people affected.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Work not declared
Employers' liability is rated by the trades supplied. Supplying workers into construction, driving or industrial settings under a policy written for office temps is the most serious disclosure failure in this class.
Deliberate falsification
Knowingly presenting a candidate as qualified or vetted when they were not is outside cover, and in regulated sectors it is a regulatory matter as well.
Fee disputes and unpaid invoices
Recovering a placement fee, or a refund dispute over a candidate who left early, is a commercial matter rather than a claim, though fee recovery often produces a counterclaim that is.
Employment claims from your own staff
Claims by your own consultants about their employment are an employment practices exposure, separate from the liability cover that answers claims about supplied workers.
Common questions
Do we need employers' liability for temps who work at client sites?
Yes, and it is your most important cover. A temporary worker you pay is normally your employee while on assignment, so if they are injured the claim comes to you even though the client controlled the site and the equipment. Make sure the policy is rated for the trades you actually supply.
A temp we placed damaged a client's machinery. Whose insurance?
Potentially yours, through vicarious liability for the acts of somebody you supplied. This is why clients specify public liability limits in their terms of business, and why those terms are worth reading before signing rather than after an incident.
We placed someone whose qualification turned out to be false.
That is a professional indemnity claim about your vetting rather than about the candidate's dishonesty. The defence is your verification record: what you checked, with whom, and when. In regulated settings expect the client's own regulator to take an interest as well.
Can a candidate claim against us?
Yes, and it happens more than agencies expect. Discrimination claims about screening, advertising or selection are brought against the agency directly, and automated filtering has made them more common because the criteria are documented in the system.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.