December 13, 2018

Asbestos review 'unsatisfactory'

The Government has been criticised for its approach to compensation for asbestos sufferers and urged to hold a fresh consultation.

The Justice Select Committee said the coalition’s approach had been “unsatisfactory” and that a review had not been conducted in an even handed manner.

In a critical report, the MPs expressed surprise that the Government had concluded a heads of agreement with the insurance industry without disclosing details to other parties.

Mesothelioma is a cancer of the pleural lining of the lungs caused by exposure to asbestos.

There were over 2,200 deaths from mesothelioma in 2011 and the number of cases is expected to continue increasing before peaking towards the end of the decade.

The Asbestos Victims’ Support Groups Forum UK has complained that cancer sufferers face being charged up to 25% of their awarded damages to pay for their legal costs as well as legal insurance premiums because of new legal provisions.

The select committee said the government’s review of claims was not prepared in a thorough and even-handed manner.

Chairman Sir Alan Beith said: “We listened carefully to views on both sides of an emotive and polarised debate about the process of claiming compensation for this terrible disease, caused by exposure to asbestos.

“We have concluded that the Government’s approach has been unsatisfactory on a number of counts.”

The committee said a heads of agreement was made between the Government and the Association of British Insurers, adding that the coalition was not open or transparent about the existence of the document.

Sir Alan added: “It was a surprise to us that the government concluded a heads of agreement, however informal its status, with parties on one side of the argument about mesothelioma.

The provisions of this document, which remained undisclosed to other interested parties, have shaped the Government’s approach to this issue, and we are concerned that the G overnment appears to have had no intention of supplying us with this document as part of our inquiry.”

Steve Murphy, general secretary of construction union Ucatt, said: “The Justice Committee’s findings should be welcomed be anyone who believes in fairness for asbestos victims.

“The Government has been caught in bed with the insurance industry.

“The Government’s proposals were the latest in a long line of policies where they have backed the insurance industry against the victims of asbestos, whose health has been damaged through no fault of their own.”

Daniel Shears of the GMB union said: ” The original consultation was clearly flawed and it’s absolutely right to look again at this as quickly as possible.

“In particular the behind the scenes deal done between the ABI and the Government flew in the face of an open consultation and we should thank the committee for bringing this shady backroom deal to light.”

TUC general secretary Frances O’Grady said: “The Justice Committee is right to criticise the shoddy deal done between the insurance industry and the Government. Victims of this terrible and fatal illness deserve proper and swift recompense.

“We hope that the Government will urgently accept the recommendations of the Justice Committee and do the right thing for the victims of mesothelioma, 2,500 of whom die each year as a result of exposure to asbestos through their employer’s negligence.”

James Dalton, assistant director, head of motor and liability, Association of British Insurers, said: “While insurers did not cause mesothelioma, the industry has always been open and transparent on its commitment to help as many mesothelioma claimants and their families as possible. We make no apologies for negotiating with government a scheme, paid for by insurers, that will compensate an extra 3,000 sufferers over the next 10 years, who would otherwise go uncompensated.

“Significantly, this report raises the issue of high legal costs in mesothelioma claims, citing an average legal cost of £20,000 for every mesothelioma claim in England and Wales. Excessive legal costs mean higher insurance premiums for all employers, and clearly claimant lawyers need to answer to why they do not support lower legal costs.”

Dave Prentis, general secretary of Unison, said: “We have long campaigned for justice for mesothelioma sufferers. But with a short and painful life expectancy the last thing sufferers and their families need are extra costs.

“The changes the Government tried to impose would have a detrimental impact on mesothelioma sufferers. It’s the negligence of past employers that has condemned these workers. It is only right employers should pay.”

Paul Glanville, a specialist mesothelioma lawyer at Slater & Gordon, said: ” We should not be making it harder for mesothelioma victims to claim the compensation to which they are entitled.

“Implementing these rules will have this effect. The Government promised a review before taking these steps. This has not taken place. Hopefully in the light of the findings the Government will take very seriously the calls from the victims and confirm that these rules will not apply to mesothelioma cases.”

A Ministry of Justice spokesman said: “Mesothelioma is an awful condition which can destroy lives in a frighteningly short amount of time and we want to help sufferers and their families. We are considering the best way to get claims settled fairly and quickly.

“We will consider the report’s recommendations and respond in due course.”


Asbestos review 'unsatisfactory'

Insurers May Face $11 Billion More in Asbestos Claims -A.M. Best

By Dow Jones Business News,
December,17 2012, 10:03:00 AM EDT

By Erik Holm

U.S. insurers may face $11 billion more in asbestos-related costs than they were anticipating, according to a new
study that warns claims on decades-old insurance policies show no signs of abating.

The insurance industry has already paid out about $51 billion in claims tied to asbestos over the past quarter
century, and has $23 billion set aside for future expenses. But the report from ratings firm A.M. Best concludes the
ultimate cost of such claims will eventually hit an estimated $85 billion. That’s up from $75 billion in its previous
estimate, published last year.

The increasing cost of each claim, the recent successes of plaintiffs’ attorneys, and the long latency periods for
some of the more serious illnesses caused by the once widely used mineral mean “sizable losses are likely to continue
for years,” A.M. Best said in the report, due to be released this week.

Insurers with significant exposure to asbestos claims include Hartford Financial Services Group Inc. ( HIG ), Travelers
Cos. ( TRV ) and Warren Buffett’s Berkshire Hathaway Inc. (BRKA, BRKB), which has taken on billions in asbestos
liabilities in recent years through reinsurance deals with American International Group Inc. ( AIG ), CNA Financial Corp.
( CNA ) and Lloyd’s of London.

While it hasn’t been widely used since the late 1970s, asbestos was once common in a variety of building materials and
other products, and valued as a fireproofing and insulation material until it became clear that it presented a
significant health hazard.

The diseases it can cause–asbestosis, mesothelioma and others–can take decades to present themselves, so new cases
continue to emerge many years after people were exposed. Therefore, insurers are still paying out on the coverage they
sold in the decades when asbestos was in wide use.

An extra $11 billion in unexpected costs over the course of several years wouldn’t be enough to cripple the insurance
industry, but investors have reacted poorly in the past when companies have announced major additions to reserves on
longstanding liabilities like asbestos.

At $11 billion, the asbestos shortfall would equal about half the estimated cost of Sandy, the massive storm that
struck the Northeast in late October.

Insurers are posting nearly $2 billion in losses each year and the “loss trend remains worrisome,” according to an
advance copy of the report.

“The plaintiff’s bar has experienced success in eroding some reforms, as well as focusing on obtaining higher
judgments for the more serious cases involving mesothelioma,” wrote A.M. Best analyst Gerard Altonji. “Given the long
latency period between exposure to asbestos and the manifestation of mesothelioma, as well as the very large number of
people exposed over a great many years…it is likely that asbestos losses will continue to develop for many years to

Write to Erik Holm at erik.holm@dowjones.com

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Insurers May Face $11 Billion More in Asbestos Claims -A.M. Best