The cases are relate to “employers liability insurance” – the insurance policies which are often claimed against by asbestos victims who develop diseases several decades after they were exposed by their employers.
In most cases, the insurer who provided policy to the victim’s employer at the time they worked for them, has always paid out compensation. However, some insurers are now refusing to pay up arguing that the correct interpretation of their policy means they only have to pay up when the victim develops an “injury”. The insurers argue that the real “injury” does not occur until a tumour develops, often decades later.
This follows a Court of Appeal decision in relation to “public liability insurance” (Bolton MBC v Municipal Mutual Insurance Ltd, 2006) in which the Court found that a policy for public liability, i.e. visitors or non-employees, was only invoked when the victim became “injured” decades later.
The implications of the High Court test cases are potentially devastating to asbestos victims. Asbestos was extensively used in UK industry until the early 1980’s. However, due to the latency period of asbestos diseases, symptoms do not appear until anything between 10 and 60 years later. During that time, many former employers have gone out of business and no longer exist.
If the argument raised by the insurers is accepted, victims will be forced to claim against the more recent insurers. However, if the employer no longer exists, there will be no insurance policy in place and the victims will be left with nobody to claim against. This is despite the fact that decades ago, employers took out insurance policies in good faith to provide cover for their employees.
The High Court test cases are expected to last for at least nine weeks and it may be many weeks after that before the Court gives its final judgment. Even then it is expected that this case will be fought all the way to the House of Lords and the real issue may not be concluded until 2009 or even 2010. While the case is argued, time is running out for the many asbestos victims who have been given a limited prognosis as a result of the devastating effects of mesothelioma.
The case has attracted the attention of Parliament with the insurance industry coming under heavy fire from some MPs. Michael Clapham MP referred to the insurers as ‘jackals’ and accused the industry of ‘hypocrisy’. Jim Sheridan MP said asbestos victims are “being treated worse than cattle”.
Daniel Easton, Partner in the Industrial Disease Department, comments as follows:
“This is a cynical attempt by the insurance industry to avoid paying out on their policies. We were repeatedly assured during the pleural plaques litigation that insurers wanted to properly compensate mesothelioma victims. Given this recent attack on asbestos victims, that clearly does not seem to be the case.
We have no option but to fight all of our mesothelioma cases to court, not knowing whether the insurance policies behind the Defendant will pay out at the end of the day or not. This simply heaps uncertainty onto a vulnerable section of society who do not know whether they, and their families, will be compensated for the fact that their employers failed to protect them years ago. Tragically, there are bound to be many victims who will die before this argument is concluded, not knowing whether the insurance companies will make good on their policies or not.”
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