Date:  20 June 2006

ASBESTOS LITIGATION UPDATE

The insurance industry is urging the government to establish a fund using taxpayers' money to provide faster compensation for victims of asbestos-related cancer, stating that the best way of helping sufferers of mesothelioma is to pay upfront compensation, splitting the costs between insurers, employers and the public purse.

A recent judgment made it more difficult for victims to receive compensation. The law lords ruled that victims should seek proportionate damages from each of their employers, rather than extract full recompense from only one of them. It has been announced that legislation will be introduced to overturn this.

The Association of British Insurers is anxious to persuade the government against simply overturning this - which could lead to higher payouts by the insurance industry - and is pressing ministers to set up a compensation fund instead.

Under the proposal, which is not complete, victims would receive a set amount of compensation after a simple test to prove that the disease was work-related. Insurers and the government would then share out the cost according to length of exposure to asbestos.

The proposal is unlikely to meet union approval, in light of the fact that the insurance industry has accepted premiums from employers over many decades, but the ABI insists it will shoulder its responsibilities, pointing out that the government has already assumed liabilities for some former state-owned employers, particularly British Shipbuilders, and is already paying compensation.

The government has still to decide precisely how to speed up compensation for mesothelioma victims.
Employers were obliged to take out liability insurance after 1972. Although many were covered before then, the ABI says most state-owned companies were not.