ASBESTOS COMPENSATION – NEW RULING – WHAT DOES IT MEAN?

On 21^st November 2008 Mr Justice Burton in the High Court in London delivered a judgment which is good news for many of those suffering from mesothelioma or their relatives who have had their claims blocked by the stance taken by certain employer’s liability insurers.  The case combined six “lead” cases involving 7 Queen’s Counsel, 13 junior barristers and 14 firms of solicitors.  The hearing itself lasted 2 calendar months and the judgment extends to 300 paragraphs.

Up until 2006 employer’s liability (EL) insurers who were on cover when asbestos fibres were inhaled by the insured’s employees would pay out so that the EL insurance policy at the time of exposure to asbestos 30 to 40 or so years ago would respond.

In 2006 that position changed when a number of major EL insurance companies, all of which are in “run-off” (no longer actively trading), Excess Insurance Company Limited, BAI (Run-off) Limited, Independent Insurance Company Limited, Municipal Mutual Insurance Limited refused to pay out any further claims.

They argued that when the inhalation of asbestos fibres took place such inhalation did not at that time cause any injury during the period of the insurance so that as there was no “injury” during the policy it did not have to pay out.

They argued that the date of the injury was when the mesothelioma tumour developed some 30 or 40 years after exposure to asbestos so it should be the EL insurance policy when the tumour developed that should respond.

This meant that many Claimants found themselves in a black hole as it is often the case that the original employer had gone out of business so there was in fact no EL insurance cover when the tumour developed.  Alternatively the wording of EL insurance policies may have changed over the years such that the EL policy for the year when the tumour developed did not respond.

If the court had upheld such argument thousands of mesothelioma claims would have failed leaving sufferers and their families without proper compensation.

The effect of this judgment is that the market practice in usage decades prior to and up to 2006 will still continue so that the EL insurance policy in place during the underwriting year when the inhalation of asbestos dust took place is the policy that will be “triggered” and the policy that will pay out.  Public policy considerations should ensure that as far as possible those suffering from mesothelioma should not be left without compensation.

The only downside is that because of the importance of the judgment the EL insurers have been granted permission to appeal to the Court of Appeal and it remains to be seen if the insurers will challenge the ruling further.