On 6 March 2014, the Government announced that a new compensation scheme had been agreed for mesothelioma victims who had previously not been able to trace their employer’s insurer. Nigel Bryson reports.
As employers are required to provide employer liability (EL) insurance, employees who develop mesothelioma owing to the negligence of their employer can claim compensation.
Mesothelioma could take up to 50 years or more to develop from initial exposure to asbestos fibres. As a result, trying to identify which insurer covered an employer up to 50 years ago can be difficult. In some cases, it is impossible. Even if an employer no longer exists, if the insurance company is known, a claim can still be registered. Clearly some employees will have worked for several employers and this often leads to complicated cases. However, if the insurance companies cannot be identified, there is no entity to claim against.
In 2011, the Employers’ Liability Tracing Office (ELTO) was established by the Association of British Insurers to identify providers of insurance for employers. It provides an historical database through which insurers may be traced who provided EL policies to companies in the past. Ninety-nine percent of current EL insurance providers are registered with the ELTO. On average, the ELTO traces around 71% of the insurers covering the employer identified in any specific enquiry.
In 2012, the ELTO had 5274 enquiries regarding mesothelioma. Of these, 61% of the insurer’s were traced. In these cases, the solicitors — on behalf of their client — could then lodge a claim against the identified insurer.
However, this also means that, for about a third of the enquiries, the previous insurer could not be identified. It is to address these cases that the Government initiated the new scheme.
No insurer: no problem
The Government has agreed the new scheme with the insurance industry. It was implemented through the Diffuse Mesothelioma Payment Scheme Regulations 2014 with claims being registered from April 2014. Under it, a scale of payment has been established so that, in those cases where the victim cannot identify the past insurer, they can still receive compensation.
The key points are that:
the scheme applies to those who have been diagnosed with mesothelioma through their work and have not been able to identify their employer’s insurer
it only applies to people who were diagnosed with mesothelioma after 25 July 2012
payments will be based on 80% of the average civil damages claims for mesothelioma
average payments under the scheme are estimated to be around £123,000
up to 800 claims are initially expected, with around 300 a year for the first few years — however, with improvements in tracing previous insurers and reductions in mesothelioma cases in future years, annual mesothelioma deaths are expected to decline
over a 10-year period, it is estimated that 3524 claims could be made, leading to a total claims value of £364.7 million
the scheme only relates to mesothelioma developing from an occupational exposure to asbestos
the claimant has not received damages or a specified payment for mesothelioma and is not eligible to a specified payment
a civil claim has not been made against any employer or insurer in relation to mesothelioma
the first payments under the scheme are expected to be made in July 2014
in cases where the person was diagnosed with mesothelioma after 25 July 2012, but subsequently died, relatives may still be able to lodge a claim (on average, most people diagnosed with mesothelioma die within eight months of the diagnosis)
the scheme is being administered by Gallagher Bassett and will be paid for by a levy on all the insurers supplying EL insurance.
While the first payments for claims under the scheme are expected in July 2014, the payment tariff has yet to be agreed with Parliament. However, in the Impact Assessment published on 6 March 2014 for the Department of Work and Pensions (DWP), a table identifying payments in relation to age was included. The figures included a lump sum of £7000 that is separate from the compensation payment for legal fees. This is made directly to the claimant and it is up to him or her how the money is spent.
As could be anticipated, the younger the claimant, the higher the award. So, using the figures in the Impact Assessment, payments could be around:
40 years of age — £216,896
50 years of age — £187,447
60 years of age — £157,998
70 years of age — £128,548
80 years of age — £99,099
90 and over — £69,649
It should be noted that these are figures taken from the Impact Assessment document and should be taken as indicators and not the actual scheme figures, which will be agreed by Parliament.
There are two other schemes that provide payments to those diagnosed with mesothelioma administered by the DWP. These are:
the Pneumoconiosis etc. (Workers Compensation) Act 1979, which provides lump sum payments to sufferers of specific occupational lung-related diseases, including mesothelioma — on average, £18,000 is awarded for mesothelioma claims
Part 4 of the Child Maintenance and Other Payments Act 2008, which provides for lump sum payments for all those diagnosed with mesothelioma, whether or not the exposure was work related — payments through this scheme average £20,000.
Those whose mesothelioma arose out of work exposure to asbestos may also be able to claim Industrial Injuries Disablement Benefit.
People may still be able to claim under the new scheme even if they have already received payments under the above schemes. However, if successful, any payments that have been made in the past would be taken into account in making a payment under the new scheme.
The new scheme applies to those who cannot identify their employer’s insurer; thus they have no one to claim against. Clearly a large number of mesothelioma civil claims have been settled and the cost, to date, has been huge. However, it is known that there are still a large number of claims to come in the future. In the UK it is expected that mesothelioma deaths will not peak until around 2016. While death rates may reduce thereafter, they will not disappear.
Insurance companies still continue to look for loopholes or challenges to established case law to reduce their liabilities in the future. Indeed, the court decision for pleural plaques not to be generally covered by civil compensation in England and Wales in recent years is thought to have saved the insurance industry around £1 billion in future claims. While yet another gap in the legal system for compensating workers who develop mesothelioma through the negligence of their employers is closed, there is still criticism of the new scheme. By only paying out 80% of the compensation suffers receive when they can identify the insurer, some argue that insurance companies are saving money unfairly.
Also the scheme only applies to those diagnosed with mesothelioma after 25 July 2014. Most, if not all, diagnosed before the threshold date will have died. Most suffers want the assurance that their family are given some financial security before they die. Essentially, the scheme ignores the families of those individuals diagnosed before 25 July 2014.
The asbestos civil compensation battleground looks set to continue for many years yet.