The industry protection scheme for collapsed financial companies will have to meet the cost of thousands of asbestos-related insurance claims after a landmark ruling by the Supreme Court yesterday.
The Financial Services Compensation Scheme, which is funded by the financial services industry, confirmed that it would pay legitimate claims, but declined to provide further detail.
The court ruled against four insurers in a test case about whether liability lay in a fatal form of asbestos-induced cancer known as Mesothelioma. The insurers, including MMI and Excess, had argued that the liability for a payout should be triggered when the symptoms of the disease manifested themselves.
But the court ruled that the insurer providing cover when the sufferer was exposed to the fatal material would be liable. The disease can take up to 40 years to show itself.
Two of the insurers – Builders Accident Insurance and Independent Insurance – are insolvent. Claims that were put on hold by administrators at PwC pending the outcome of the ruling can now proceed. It is understood that MMI, a mutual, continued to payout claims throughout the process. The insurers were particularly affected by the issue of liability because the wording of their policies was more open-ended.
The Times 29.03.12