Insurers welcome clarity as decision ends fear of compensation bill for taxpayers
Insurers have welcomed the clarity of the Supreme Court’s landmark ruling on asbestos exposure, but the decision could result in thousands of claims being brought by the relatives of workers who died after being exposed to asbestos.
The Supreme Court last week ruled that insurers were liable from the moment an employee was exposed to asbestos, not when mesothelioma cancer first appears, which could be up to 40 years after first contact.
The decision means employers’ liability policies will be interpreted on a causation basis. It provides clarity to insurers that faced uncertainty over millions of pounds worth of liabilities, following the Court of Appeal ruling that the insurer at the point of exposure would be liable.
ABI director of general insurance and health Nick Starling said: “Today’s ruling has confirmed what most in the industry have always understood: that the insurer on cover when the claimant was exposed to asbestos should pay the claim, rather than the insurer on cover when the mesothelioma develops.”
Insurer MMI took part in a joint action to determine the extent of its liabilities under policies written up to 1992 when it stopped writing new business. Despite admitting that it was not the outcome it had hoped for, MMI chairman Sir John Lovill said: “We welcome the clarity this judgment brings. We will now consider further the detailed implications of the ruling for MMI.”
Zurich also backed the ruling. A reverse judgment, it argued, would have resulted in taxpayers having to foot the bill for compensation payouts through the local authorities, with some victims receiving significantly less than they should if the insurers weren’t there.
Zurich’s UK general insurance chief executive, Stephen Lewis, said: “This judgment reinforces the point that policies we thought we were selling … are now to be upheld as such.”
Pass notes: Asbestos dispute
What are the origins of the case?
The original EL dispute was heard in the High Court four years ago, and comprised six different test cases covering a range of scenarios.
What was the main issue at stake?
Several insurers in run-off or provisional liquidation had challenged an earlier public liability judgment on the basis that they should only respond when a disease starts to manifest.
What does this mean for the Court of Appeal ruling?
The decision reinstates the practice that EL policies respond to the culpable exposure of an employee to asbestos by their employer.