Last March Colin Hamling, casualty underwriter at St Paul International delivered an address to the Insurance Institute of London.

He could not have known how prophetic the final comment from his paper "Insurance Issues and Concerns Following Rail Privatisation" was. "However good the industry it will remain vulnerable to a major disaster from small causation," he said.

This week, as insurer to both Thames Link and Great Western, St Paul finds itself centre stage in the search for answers to what happened at Paddington.

The liability issue centres on whether the crash resulted from an infrastructure problem or an operational problem arising from the driver passing a red light.

The key issue now is dealing with the crash victims rapidly. The last thing anyone wants is victims having to navigate through the web of companies set up when British Rail was privatised.

The Claims Allocation and Handling Agreement, was the protocol established to deal with incidents such as the Paddington tragedy.

Hamling says its philosophy is based on: "the premise that the public should be indemnified without being embroiled in arguments over the respective liabilities of the multiple industry parties involved in an incident."

The ABI feels that the majority of claims are likely to be met from railway companies' public liability insurance but insurers will only begin to pay once responsibility has been settled

St Paul has already made funds available to victims and their families.

Once the question of responsibility has been decided, the next issue is to settle the extent of liability.

Three years ago, the Law Commission proposed a new statutory offence of corporate manslaughter where companies could be prosecuted for "management failure" if the failings of its management or organisation had caused a death. The proposed penalty was an unlimited fine with the power to order remedial action.

However, in the Southall crash case of 1997 the Criminal Prosecution Service turned down a corporate manslaughter action on the grounds that it needed an individual to bring the charge against.

John Beagley, partner at law firm Rosling King, says: "In connection with the incident at Paddington we foresee that the HSE will try again. We anticipate that one of the legal implications will be to accelerate the bringing in of the new Corporate Killing legislation."

In addition there will be the issue of who is entitled to damages.

According to solicitor Chris Mather, whose firm Pennington's has clients involved in the Southall rail crash, this will be an issue of proximity.

He says: "The right of rescuers to damages for post-traumatic stress has been accepted since rail crashes in the 1980s.

"Passengers who aid other passengers, and members of the emergency services both have the right to a claim."

But, Mather stressed that relatives would find it difficult to claim for shock resulting from their family members being involved in the crash, unless they were actually close to the scene. "If relatives were allowed to claim premiums could go through the roof," he said.