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March 28, 2012

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Exposure triggers liability, not symptoms, rules court

A ruling by the Supreme Court could pave the way for thousands of asbestos victims to pursue insurance claims.

By a four-to-one majority, the Court decided today (28 March) that employers’ insurance liability (EL) is “triggered” when an employee was exposed to asbestos fibres, not from the onset of symptoms. The ruling concludes a six-year journey through the courts and marks a victory for sufferers, and their relatives, of the cancer mesothelioma.

Prior to 2006, the insurance industry had operated EL policies on a causation basis and would indemnify if exposure occurred during the policy period, irrespective of how the trigger clause was worded. But, owing to how certain policies were worded, a public-liability case in 2006 had the effect of shifting insurer responsibility from the time of exposure to the time when the tumour began to develop.

Seeking to reverse this stance, a group of claimants and employers won a High Court ruling in 2008, which decided that EL policies with ambiguous wordings should respond on a causation basis. A group of insurers appealed and a Court of Appeal ruling in 2010 failed to reach a consensus.

Today’s Supreme Court ruling should restore some clarity. One of the judges, Lord Mance, was eager to emphasise that the courts should “avoid over-concentration on the meaning of single words and phrases viewed in isolation and look at the insurance contracts more broadly”. He concluded: “The natural inference to draw from the references to being engaged in the employer’s service, and in work forming part of the employer’s business, is that it was envisaged that the accident or disease would and should arise out of such service and work, rather than merely occurring during it.”

Lord Clarke added: “The whole purpose of these policies was to insure employers against liability to their employees. That purpose would be frustrated if the insurers’ submissions on this point were accepted.”

Len McCluskey, general secretary of Unite, which represented some of the claimants, said: “This is a landmark ruling, which will affect thousands of victims of asbestos. It is a disgrace that insurance companies went to such lengths to shirk their responsibilities. For callous insurers, this means the responsibility holiday is over.”

Nick Starling, director of general insurance and health at the Association of British Insurers (ABI), welcomed the ruling, and stressed: “This case has been pursued by a small group of ‘run-off’ insurers acting independently and at odds with the views of the majority of the UK insurance industry.”

Outlining where the organisation feels further reform is needed, Starling added: “The ABI is in favour of introducing a pre-action protocol so that claimant solicitors and insurers are held to strict timelines to ensure cases are dealt with as quickly as possible, and this could be underpinned by an online mesothelioma portal to improve the efficiency of the claims process.”

John Evans, technical director of Santia Asbestos Management, said the judgement serves as a warning to all employers to ensure that their asbestos management procedures are sound and robust.

He said: “As a result of this case, it is likely that a claimant’s entire employment history will be taken into account, and liability will fall with all of that person’s previous employers who may have exposed them to asbestos. Employers need to acknowledge the warning that this judgement provides by undertaking a comprehensive review of their asbestos management procedures to ensure that future illnesses will not result from today’s exposures.”

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