22/05/2014
Recent case law and legislation improve contractors' prospects of recovering claim costs from insurers in mesothelioma claims.
Mesothelioma claims can prove to be particularly expensive. Mesothelioma is a cancer caused by inhalation of asbestos fibres. There were only 153 mesothelioma deaths in the UK in 1968, but that figure had risen to 2,156 deaths in 2007. The long delay between initial exposure to asbestos and death from mesothelioma is typically between 30 and 40 years. This means that current asbestos-related deaths reflect working conditions of the past, when asbestos was widely used in the construction industry, rather than current work practices.
The number of mesothelioma deaths in the UK is not expected to peak until at least 2016. The Actuarial Professions UK Asbestos Working Party estimated future costs of asbestos claims to be £11 billion.
In International Energy Group Ltd V Zurich Insurance (Court of Appeal 6 February 2013) an employee with mesothelioma was employed by IEG for 27 years and exposed to asbestos during the whole of that period, including during a 6 year period, when IEG was covered under an Employers’ Liability policy with Zurich. The Court of Appeal rejected Zurich’s claim that IEG was only entitled to a proportion of its outlay, namely 6/27ths; corresponding to the 6 out of 27 years of exposure when the policy was in place. IEG had a contractual right of indemnity for the whole of the claim under the policy.
This is a helpful decision for the construction industry, as it puts the onus back on the insurer to pay for gaps in historic employer's liability insurance cover. Zurich's appeal will be heard in the Supreme Court on 15 and 16 July 2014 and in the meantime EL insurers continue to put up resistance to paying the whole claim in these circumstances.
The Mesothelioma Act 2014 introduces a statutory scheme for payments to be made to ex-employees diagnosed with mesothelioma after 25 July 2012, who are unable to trace their former employer or insurers. This scheme is to be paid for by a levy on insurers.
The Act may also assist the construction industry with disputes with their employer's liability insurers in mesothelioma claims. It provides the statutory authority for a new independent Technical Committee to impose binding decisions on insurers, where there is a dispute over whether they insure a particular employer's liability claim. This could swiftly cut through such disputes and avoid costly court cases such as IEG v Zurich, discussed above.
In May 2013 the Employer's Liability Tracing Office launched a dedicated Tracing Investigator Team to ensure that more thorough enquiries are made to trace employer's liability insurance policies in mesothelioma claims and we are seeing the benefits of this to our clients. We have been able to work with the Tracing Investigators to find historic insurance cover.
Contractors may be liable in full to a Claimant, even though the Claimant may have worked at many different sites for many different employers over the years. Problems arise where other employers have changed names or become insolvent, and they and their insurers are untraceable.
The value of a typical mesothelioma claim including damages and costs is between £150,000 and £200,000.
These developments improve the prospects of insurers rather than employers having to carry the cost of mesothelioma claims.
Bevan Brittan has a specialist asbestos claims team with a strong track record of minimising our clients’ outlay in asbestos claims.
* Image: Scanning electron microscope picture of Asbestos
