The state must pay or insurers will go bust, says Hiscox chief
The state must pay for long-tail liability claims, such as asbestosis, if the insurance industry is to survive.
This was the stark warning expressed by Hiscox chief executive Bronek Masojada at Strategy 2002 last week.
He told delegates that, inevitably, "taxpayers will have to pick up the bill" for long-term liability claims or more insurers would go bust.
"The state can't expect insurers to pick up the costs for mistakes made 30 years ago. People today are paying the price of the illnesses of their parents," he said.
He said major changes had to be made to all liability policy wordings, especially employers' liability.
"What we need is a policy that offers cover for five years for major critical illness, but then the responsibility reverts to the state.
"Let's put it in perspective. Would you rather be an industrial worker, who contracts a critical illness, but knows the state will pay your medical bills; or an industrial worker who has his critical illness covered by Independent Insurance?
"The problems affecting Royal & SunAlliance are based on the long-tail claims. If nothing changes we will be having these liability crisis talks every ten years.
"Will the current insurers be solvent in 50 years? That's the question. People think they are buying cover for life, but they don't."
BBC journalist John Humphrys, who chaired the conference, asked delegates whether they agreed - a resounding 90% backed Masojada's plans.
Motor Trade Solutions chairman Mike Slack said: "I totally agree with Masojada. To be honest I would be happy if the cover cut-off point was ten years, as long as I knew how much to reserve for. Who knows what disease we could be facing in 20 years time."