Insurers have now paid more than £1m to asbestos victims left without compensation by the collapse of Chester Street Insurance Company.

The Association of British Insurers (ABI) setup a fund in August 2001 to compensate Chester Street's claimants, and has since made 159 payments.

As revealed by Insurance Times, the fund was set up after the ABI warned its members that a failure to pay out would result in "a PR disaster" and damage the industry's relationship with the government.

A £2m levy was collected from insurers, in proportion to their share of general insurance premium income, to be used for compensation.

The fund meets claims from people whose injuries relate to employment prior to 1972 and whose claims arose between January and December 2001.