Bill set to pass next week

The group of insurers considering suing the Scottish government over pleural plaques is thinking about taking on the UK government.

AXA, Norwich Union, Zurich and RSA have already threatened the Scottish government with legal action over its bill on pleural plaques, a symptomless condition caused by exposure to asbestos, Insurance Times understands.

The Scottish bill, introduced in June and set to be passed on Wednesday, would overturn a Law Lords ruling in 2007 that pleural plaques are not compensated under the law of damages.

The UK government was set to announce in November whether it would reinstate compensation for pleural plaques. But more than three months on, there has been no movement. Insurers are worried the Scottish bill will affect the decision in England and Wales.

“Whether [the Law Lords ruling is overturned] legislatively in Scotland or in England and Wales, our arguments remain the same,” said Matthew Scott, AXA’s head of liability claims. “So we would probably still be looking to use those arguments if the same stands for England and Wales.”

A Norwich Union spokesman said: “On plaques, Norwich Union is not in favour of anything other than the status quo in the UK.”

Despite the threat of legal action and criticism from the Scottish parliament’s justice committee over the potential cost of the bill, the legislation has quickly reached the third and final stage.

In a letter to the justice committee dated 25 February, Fergus Ewing, Scottish minister for community safety, conceded it was right to scrutinise the costs, but said the Holyrood government “remains convinced this is the principled position”.

The first stage of the bill highlighted wide disparity over financial projections. In its written evidence, the ABI said: “[The Scottish government] suggests the annual cost to defendants will be between £5.5m and £6.5m. Figures from the UK government suggest the annual cost in Scotland would be between £76m and £607m and the total cost in Scotland would be between £1.1bn and £8.6bn.”

Ewing said the annual figures of £5.5m and £6.5m related to private sector defenders. The other figures are not part of the UK government consultation but “seem to reflect a calculation by the ABI based on its contention that 30% of asbestos liabilities are in Scotland”.

But Scotland’s government has revised its cost estimate to between £60.05m and £131.31m from the enactment of the law to the predicted peak claims year of 2015.