Government minister Patricia Hewitt gave an emphatic political response when the question of Chester Street Holdings reared its head again in the House of Commons this week. She said the government was in talks with the insurance industry to ensure “matters are put right”. What does this mean?
The matter was put wrong partly because the Financial Services Authority allowed Chester Street to sell Iron Trades to QBE. Chester Street collapsed soon afterwards, unable to pay thousands of claims to asbestos sufferers. The majority of them will not be covered under the Policyholders Protection Act, because they incurred their injuries before 1972, when employers' liability cover became compulsory.
Perhaps the government and the insurance industry should look Down Under for a solution. The Australians have introduced a 1% levy on all insurance policies for five years to pay for the collpase of the insurer HIH. Surely this is an example of the third-way partnership between state and industry that is the cornerstone of New Labour.