Scottish MP Tony Worthington will raise questions in parliament on behalf of Insurance Times this week about the Department of Trade and Industry's role in the Chester Street Insurance Holdings liquidation.
Worthington has questioned the economic secretary, Melanie Johnson, on compensation for asbestosis sufferers who acquired the disease before 1972, while working for employers insured by Chester Street.
He had not received a reply at the time of going to press.
The Policyholders' Protection Board and the Financial Services Authority have already said it was not their legal responsibility to help.
Worthington will now question the regulatory role played under the Insurance Companies Act 1982 in the financial movements of Iron Trades Employers Insurance Association.
In 1997 the association transferred its assets and liabilities to Chester Street. In 1999 Chester Street sold its 100% shareholding in Iron Trades Insurance to QBE for £175m.
Chester Street went into liquidation on January 10 with assets of £30m and liabilities of £250m.
Worthington's Clydebank and
Milngavie constituency has the UK's highest concentration of male asbestos victims, because it had two shipyards and an asbestos factory.
Worthington is threatening a “considerable row” if the men are not compensated. “To be landed with a death sentence, then have compensation withheld, is unacceptable,” he said.
Former Scottish Secretary John Reid had promised to investigate the case, but he was moved to Northern Ireland after the resignation of Peter Mandelson. His replacement, Helen Liddell, said the government was “keeping a close eye on the situation”.