Mesothelioma: challenge to UK’s approach as claims surge

An upturn in mesothelioma claims has sparked a warning that the insurance industry needs to prepare for a challenge to its current restrictions on claimants as the debate continues to determine who will pay for the cancer crisis.

The initial surge in mesothelioma-related claims typically hit those who were employed in industries such as construction, manufacturing, railways and shipbuilding.  But a surge in high-profile claims from those who had secondary contact with asbestos particles, either by coming into close contact with or washing the work clothes of a family member, has led to a warning that a change in restrictions for mesothelioma claims could leave the insurance industry exposed to greater losses. 

Mesothelioma cases are now increasingly hitting national headlines, with last week’s compensation award against the Ministry of Defence for a woman who contracted cancer after hugging her dockyard worker father the latest to raise awareness of the disease.

Awareness is set to increase further today, which has been designated National Mesothelioma Day by the British Lung Foundation, with support from other organisations with members at high risk of mesothelioma. 

Estimates of the economic cost of the UK’s asbestos liability have put the future cost at somewhere between £5bn ($9.81bn) and £20bn, with much of this cost expected to be borne by the insurance industry (Idnewscentre, Dec 15, 2006). 

“These cases are now making the mainstream media.  We are seeing an increase in claims – this is something that should be concerning UK companies,” said Ian Pelham, at Marsh’s Insolutions unit. 

The majority of the UK mesothelioma claims will be paid by employers’ liability policies.  Claims are excluded from public liability policies because of the Association of British Insurers’ (ABI) 10-year rule from the date of manifestation.

“They take 10 years back from the point at which the mesothelioma was diagnosed and say that is when we will look at insurance,” said Pelham.  “On public liability policies that were written 10 years ago, there will be an asbestos exclusion.  The ABI 10-year rule has not yet been challenged, but with this increase in claims you have to wonder if it will be at some point.”

Pelham said British industry should be concerned with the upturn in claims, which has the potential to cost the UK economy a huge amount in compensation payouts. 

“This is an issue boardrooms should be considering.  This is a growing problem for British industry and local governments,” he said.  “The typical mesothelioma claim is between £200,000 and £225,000.  We think UK risk managers should be aware that this is only going to get bigger.  It will peak somewhere between 2010 and 2020.”

Pelham added that it will not be until 2040 that the insurance industry sees the tail of the mesothelioma crisis.

“Meanwhile, 3,000 people a year are being diagnosed with mesothelioma.  It is a problem that is not going to go away,” he said.  “All studies suggest that during the next 10 to 15 years this is an issue British industry will be facing regularly.”

Scott Vincent in “Insurance Day” 27^th February 2007