New proposals to allow the government to claw back mesothelioma compensation payments from insurers could cost the industry millions of pounds.

According to the Department for Work and Pensions (DWP) the new legislation will be enforced as early as next year.

Secretary of State John Hutton has proposed that lump sum payments be made to all people diagnosed with mesothelioma within six weeks.

The new rules would also allow the government to recover the money at a later stage if a civil compensation claim is subsequently successful.

According to the DWP, such payments, averaging about £17,000, could start as early as next year.

Insurers have welcomed the proposal to speed up claims payments, but the ABI said it was too early to say what financial impact it could have on the industry.

"It is imperative that those legally entitled to compensation get it as quickly as possible, not only in mesothelioma cases, but in all cases," said an ABI spokesman.

But insurers have suggested that liability rates may need to increase as a result of the changes.

However, some are sceptical of how the industry will deal with the new rules. Ian McFall, head of asbestos policy at Thompsons Solicitors, said: "It brings an end to the windfall payments received by insurers since 1999 to 2007. They were able to deduct state benefit payments from claimants' awards but did not repay that sum to the government. During this time the insurers have seen a saving of £14m."

He added: "It is therefore disappointing that on the back of this positive announcement the insurance industry has responded by suggesting that insurance premiums will have to go up. This is nonsense."