ABI has yet to begin crucial report on long-tail disease

Further delays in proving long-tail occupational diseases should be separated from employers' liability (EL) cover will mean the government will not take action, according to senior industry sources.

The establishment of a fund to separate long-tail risks has been advocated by most insurers. But in its June report on the EL crisis, the DWP said it would require more evidence into the merits of separating long-tail disease.

To convince the DWP, the ABI said it would commission consultants to produce a "major piece of work" on establishing a long-tail fund, but has not yet begun this work. ABI head of general insurance John Parker said he expected the ABI to sign off on the work to be done "in the next couple of weeks".

It was thought that the DWP's second report into the EL crisis, looking at increasing the role of rehabilitation in compensation, legal costs - including considering faster and more cost effective dispute resolution measures - and the possibility of separating long-tail occupational disease from accident risks, would be delayed due to the reshuffle that saw Work Minister Nick Brown replaced in June by Desmond Browne. But a DWP spokeswoman said that despite the changes, "work is ongoing" and the second report is expected to be released in September. A senior industry source said: "The ABI is cutting it fine. Any further delays in producing the report will give the DWP a reason to ignore the case".

Meanwhile, the Federation of Small Business (FSB) has, for the first time, criticised insurers for their failure to help ease the crisis. An FSB spokesman said: "We have worked hard to find areas of common ground with insurers, but are disappointed about the lack of action so far. Although the insurance industry is making the right sort of noises there has been no change in the relationship with insurers."

The spokesman said the FSB will be looking for a detailed timetable and some acknowledgment that short term assistance is required when the DWP releases its second report.