Regulatory Insurance policies offered by the Próspera insurer of last resort (Próspera Insurance Company LLC) typically call for compliance certifications and audits. The insured is tasked with furnishing periodic compliance certifications from an expert in the field of regulation that corresponds to its regulatory election; and the regulatory insurer furnishes a compliance auditor who is responsible for periodically inspecting the insured's operations, starting with a review of historical compliance certifications and their bases.
If you are an expert in a relevant field of regulation, you just might want to let the Próspera General Service Provider (also known as the "GSP", which is affiliated with the insurer of last resort) know that. You could get your name on the roster and earn decent compensation as a compliance auditor. This brief article is intended to provide guidance on how you should think of your obligations if you are hired by the GSP directly (or through its affiliated insurer of last resort) to serve as a compliance auditor.
Inspections and Reporting
As compliance auditor, you will undoubtedly be called upon to inspect the operations and records of an insured for regulatory compliance. In this role, the dates and details of each inspection conducted, and the discovery of any noncompliance, should be promptly recorded and reported in writing or electronically. Any condition or activity posing a grave or imminent threat to life safety should be reported as quickly as possible, even if informally, to the Próspera General Service Provider. The Próspera General Service Provider is primarily responsible for all enforcement actions, although the regulatory insurer has powerful contractual rights to induce compliance by the insured.
Industrial Regulation Statute Compliance Audits
The Próspera Industrial Regulation Statute prohibits any action or omission that injures or threatens to injure any person or that creates a nuisance. It also imposes 3x damages and other serious sanctions on any person who violates this prohibition. However, a “safe harbor” from these extraordinary remedies is provided for "Regulated Industry Persons" if they elect to operate under a Próspera "Optimal Regulation" in a Regulated Industry or otherwise “as if” operating in a designated "Best Practices Peer Country" jurisdiction.
Hence, it is critical to determine in each Regulated Industry project whether the Insured has made a regulatory election. If none has been made, then the Insured is still held to common law standards of reasonable care, which is a matter of reasonable judgment and custom; and that often includes consideration of prescriptive regulation as setting the standard of care regardless. Once you determine the applicable regulatory election, you will need to conduct your inspection with regard to the standards that specifically concern the Regulated Industry in particular.
For example, if the building codes of Honduras have been elected by a Regulated Industry Person in the Construction Industry, this means that you will need to audit the Insured’s compliance with regard to construction practices and outcomes required by governing law in that jurisdiction relative to:
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mitigating environmental impacts;
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structural design and construction (concrete; framing; support columns; load-bearing structures);
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water and waste systems (plumbing, septic, potable water systems);
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electrical systems (circuit breakers, generators, interconnection, wiring, supply and distribution)
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HVAC systems;
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egress/ingress design and construction (stairs, doors, windows, lifts (elevators));
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life-safety systems (fire suppression);
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natural disaster mitigation (earthquake or hurricane mitigation standards); and
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internal and external finishing.
Similarly, as an expert in a particular field of regulation, it will be important for you to prepare for an audit in your Regulated Industry by similarly preparing a check list of key points of compliance to review when in the field. You should create an inspection plan and review it with the GSP or insurer of last resort before commencing any audit.
Coral Reef Protection Statute Compliance Audits
Próspera law prohibits any action or omission that harms or threatens to harm the living corals of the reefs that surround Roatán. It also imposes 2x damages and other serious remedies on any person who violates this prohibition. This is in addition to the extraordinary remedies available under the Industrial Regulation Statute. The test for compliance with this standard requires the application of your professional judgment based on customary best practices.
It is entirely possible that the Insured’s compliance with the regulatory election of the Industrial Regulation Statute would also comply with the Coral Reef Protection Statute.
But you should also inspect the reality on the ground and whether runoff, silting or other side effects of the project are occurring that appear likely to cause damage to the living coral reefs. Report all such occurrences promptly.
Hazard Precaution Statute Compliance Audits
Due to various treaties and national Honduran laws that derive from treaties, Próspera law also prohibits hazardous activities and conditions. It imposes 2x damages and other serious remedies on any person who violates this prohibition. This is in addition to the extraordinary remedies available under the Industrial Regulation Statute and the Coral Reef Protection Statute. It is the final regulatory guardrail.
“Hazardous Activities and Conditions” include activities, chemicals, wastes, emissions, or conditions that are “Abnormally Dangerous” to import, produce, store, transport, use, manipulate, export or make final disposal of, and that either:
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create risks to human health and safety of the type that ordinary adult persons are ordinarily incompetent to mitigate without special training or expertise;
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are prohibited on the grounds of public health and safety from import, production, storage, transport, use, manipulation, export or final disposal under generally applicable national laws of the Republic of Honduras or under any treaty applicable to the Republic of Honduras (if you would like to see the list of applicable treaties, please email gsp@prospera.hn); or
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are subject to public health and safety regulation during import, production, storage, transport, use, manipulation, export or final disposal under generally applicable national laws of the Republic of Honduras or under any treaty applicable to the Republic of Honduras.
Note that you are assessing both activities and conditions. You need to inspect not only for the equivalent of an oil spill, but also conduct or behavior onsite that is “Abnormally Dangerous” in your professional judgment.
Whether the activity or condition is “Abnormally Dangerous” is the threshold question before you reach any other question about Honduran national law or treaty law. Assessing whether an activity or condition is “Abnormally Dangerous” requires a professional judgment call by you after considering the following factors:
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The existence of a high degree of risk of some harm to the person, land or private property of others.
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The likelihood that the harm that results from it will be great.
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The inability to eliminate the risk by the exercise of reasonable care.
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The extent to which this activity or condition is not a matter of common usage.
If you believe in good faith and reasonably that the Insured is not engaged in any “Abnormally Dangerous” activity or condition after considering these factors, then you may reasonably conclude that the Insured is in compliance with the Hazard Precaution Statute. Moreover, it is likely that compliance with the Industrial Regulation Statute will also result in compliance with the Hazard Precaution Statute. But it is also possible that an “Abnormally Dangerous” activity or condition on the work site just is not addressed by the Insured’s compliance with the Industrial Regulation Statute. Commonsense might dictate an activity or condition is “Abnormally Dangerous” even if permitted or unaddressed by a specific regulation. In that case, you should promptly report the existence of the “Abnormally Dangerous” activity or condition to the Company and Próspera General Service Provider as part of your compliance audits.