The future of a liability scheme for licenced asbestos removal contractors is in doubt just two months after its official launch.

The facility between specialist commercial broker Direct Insurance Agency and global insurer QBE started from 1 January 2006.

But the scheme, only the second of its kind in the London market - and a sector worth about £50m - now looks unlikely to continue.

A source close to QBE said that the scheme had "withered away".

David Bearman managing director of Direct Insurance told Insurance Times in January: "On a scale of one to 10, this is 11 in terms of its importance to the London liability market, with the construction industry generating 30% of premium income in the whole the UK.

"Until now it has been a closed shop to existing brokers. Clients for the first time will have a serious choice."

The unlimited capacity scheme, underwritten entirely by QBE, included an independent Health and Safety executive approved audit conducted within 30 days of the risk being placed.

Both parties declined to comment.