Handling of asbestos claims unchanged after judgment

Market practices for the payment of compensation under employers liability policies for the fatal asbestos-related condition mesothelioma are to remain unchanged after a legal challenge by a small group of runoff insurers failed.

In the High Court judgment in Municipal Mutual vs. Zurich Insurance & Others handed down Friday, Mr. Justice Burton sided with insurer Zurich Financial Services.

The case—known as employers liability trigger litigation—was one of six test cases heard in June and July this year.

The traditional approach to handling asbestos-related employee liability claims in the United Kingdom was based on the time of exposure. An employer and its insurer were typically liable to pay compensation for the proportion of time an employee was exposed to asbestos dust.

But the Court of Appeal ruling in the Bolton vs. Municipal Mutual & Commercial Union (2006)—which was concerned with public liability—said that an insurance policy would only pay out if it was in force at the time an individual fell ill, potentially many years after exposure. Several insurers had tried to apply the Bolton ruling to employers liability claims, and argued that policies were triggered by the development of the disease, rather than by the exposure to asbestos.

Zurich and 10 local authority defendants challenged this change in market practice.

“If we did not challenge this issue in court, then the compensation payments for the victims that were negligently exposed to asbestos would have been either significantly less than they should have been, or non-existent in cases where the insurer has ceased trading, or is insolvent,” said Iwan Borszcz, casualty claims director at Zurich U.K.

From Business Insurance