Supreme Court prevents asbestos insurers from wriggling out of workplace compensation payments.

Partner Marcus Weatherby – who has a particular interest in industrial disease claims – is delighted with today’s landmark Supreme Court ruling regarding workplace victims of asbestos exposure

The Supreme Court has ruled today that insurers who offered cover for negligent employers at the time when victims inhaled deadly asbestos fibres will have to pay compensation.

It seems only common sense, doesn’t it? And yet four insurers in particular have been trying to find a loophole to avoid payment, and have been fighting this case for the last 6 years.

People negligently exposed to asbestos whilst at work have developed an asbestos-related cancer called mesothelioma. But half a century can pass before the asbestos fibres in a person’s lungs actually cause the cancer. What these insurers have been arguing is that an employer’s liability is restricted to when the cancerous tumours started to develop, instead of when victims were exposed to the dust in the first place.

It is the ultimate in sneaky, ‘should have read the small print’ arguments. The sort that make us all groan when our household or holiday insurance claims are knocked back. The victims, or their relatives, rightly assumed that an insurer who was paid a premium to provide protection during the period when exposure occurred would pay out. But they were mistaken.

As a consequence of this drawn-out legal battle, most of the cancer patients affected by today’s ruling have now died. It is their relatives who have been awaiting the result. And – with the claimants winning by a majority of 4-1 – they’ll be pleased that justice will, at last, be done.

The gist of the judgement is that a disease may properly be said to have been ‘sustained’ by an employee in the period when it was caused or initiated, even though it only developed or manifested itself later.

But why were the insurers so keen to fight?

Because it’s estimated that, as a result of the ruling, the compensation bill could be over £600m. And mesothelioma deaths in the UK are not expected to peak until 2016. So, if you include the future claims that will be brought, up to 25,000 families could be affected by the ruling. Pushing the potential bill to £5bn.

I believe that the insurers who took the premiums at the time when the asbestos exposure occurred should always have paid out. The insurance business is all about assessing risk, and companies have a professional duty to vet these risks properly before they underwrite. When their decision came back to bite them they chose to try and avoid payments on the basis of a mealy-mouthed small print argument after they’d collected premiums for many years.

It’s a disgrace that they ran this argument at all.

The Supreme Court press release puts it rather well :

The purpose of the EL policies was to insure the employers against liability to their employees. Once it is held that the employers are liable to the employees, it would be remarkable if the insurers were not liable under the policy.


Accidents and Disease, Current Controversies, H & S, Marcus Weatherby, Medical Negligence,
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