The Association of British Insurers wrote recently to members of Parliament calling for a “new independent body” to make the compensation system for mesothelioma victims “both fairer and faster”. Tom Jones, Head of Policy for Thompsons, looks at their proposals.
The ABI wants a scheme to assess and pay claims, and make payments where it is not possible to sue an employer or insurer. It has cited the scheme that exists in the Netherlands as a possible model.
It would, they say, provide certainty for claimants, faster payments, and end the obscene legal challenges by the insurers and employers, as happened in Fairchild v Glenhaven and Barker v Corus (pages 4-5).
Why though would insurers agree to a scheme that does not provide them with substantial savings? While they might save on the costs of court fees and disbursements, any scheme would still require lawyers to represent the interests of the claimant and work out such things as dependency schedules, to conduct what can be complicated special damages claims, loss of earnings and services claims (ie gardening, DIY).
The clue lies in the Dutch scheme, which is generally considered to be cheap and quick, but very limited in its application.
There are actually three systems for paying damages to asbestos victims in the Netherlands: the court system based on employers’ liability law (protracted and regularly challenged by insurers and employers); the Dutch Institute of Asbestos Victims (IAS) scheme; and the public compensation scheme (TAS).
The IAS scheme was set up in 2000 to reduce the “legal agony” for sufferers and to get quick results for mesothelioma victims - no more than nine months for compensation, with the aim of sufferers receiving it while they are still alive.
It is only for mesothelioma victims whose exposure occurred within a 30-year period. And they have to put in their claim themselves, although it can be passed on to dependants after their death.
The IAS has representatives of victims – unions and support groups – employers’ federations, public employers’ federations and the Dutch Federation of Insurers on its supervisory and advisory boards. The Government also provides financial back-up. IAS uses a closely associated specialist company to mediate claims. Legal professionals deal with issues of liability, medical evidence, employment history and so forth. There are strict procedures for time limits, standardised rates and appeals (about one in three applications were turned down in the first year, but the rate of rejections is declining). If all the qualifying conditions for mediation under the scheme are met, then the applicant is entitled to a financial settlement based on standardised, index-linked rates.
In 2006, these include a standard amount of €47,429 (£32,363.30) in compensation for immaterial damage, €2,636 (£1,798.60) for material damage and €2,636 to cover the expenses incurred by the claimant or their dependant. The scheme also provides an advance payment of €16,476 (£11,139.12).
The system is quicker than the Dutch legal route and pays about the same as the courts. But it has not reduced “the legal agony” as the investigations that the IAS has to carry out are still complex.
Where there is no traceable employer, the TAS system applies. It pays the same amount as the IAS’s advance payment, and is a safety net only, a gesture by the government to acknowledge the suffering of individual victims who cannot claim from their employer. It also pays out to spouses and children who develop mesothelioma from overalls exposure.
A possible UK scheme
It is clear that the Dutch model is extremely limited in its application, not least because it is for mesothelioma sufferers only, and because of the rigidity of its payments.
Basing a UK scheme on the Dutch model would not do away with the complexity of establishing liability. It would however speed claims up because of the short time limits it imposes. This however could be done under the existing protocol. Many asbestos cases are concluded within months and the Barker amendment to the Compensation Act (see page 4-5) ensures speed as a priority.
Any asbestos compensation scheme must also allow a widow with a valid dependency claim but who is not named as an executor to claim through the scheme. As should other next of kin if there is no widow.
The amounts set for general and special damages should be reviewed yearly to take account of inflation. Any scheme must provide for equivalent levels of compensation to civil damages linked to an annual inflation update. A scheme must not be a smokescreen for the insurance industry to evade or shift any of their current liabilities.
Mesothelioma sufferers and others who are very ill do not currently have to endure a medical examination in order to make a claim, as experienced medico-legal doctors can prepare a report based on paperwork only. In the Netherlands it is usually necessary to have a medical examination. Will the insurance industry accept the inclusion of all five asbestos conditions, including lung cancer and pleural plaques? Given the Rothwell pleural plaques test cases to be decided by the House of Lords, and the regularity with which insurers resist lung cancer claims, presumably not. In the Netherlands it has not so far been possible to extend the scheme beyond mesothelioma sufferers.
And what of claims where there is no defendant, because all employers are untraceable or dissolved without insurance, or for claims for women and children who developed mesothelioma from the asbestos dust from overalls? There seems to be little need for a new, separate system in the UK, given the existence of the Pneumoconiosis Act 1979, but this should be extended to allow claims for women who were exposed in that way.
The fact is that prompt payments of civil compensation can be obtained right now by using a specialist mesothelioma Fast Track procedure operated by Master Whitaker in the High Court. This system ensures that where the insurers have no defence, judgment is entered in a matter of weeks, an immediate interim payment is available to claimants, and thereafter the case is progressed quickly and efficiently to a hearing to determine any outstanding issues.
We would suggest that the simple answer (if we all truly believe in the need for speed and fairness) is to ensure that Master Whitaker’s management of mesothelioma cases is extended or his procedures adopted in other Court centres.
And the ABI should encourage all its members to respond to asbestos claims without delay, admit liability when it is clear the claim is going to succeed and put forward reasonable proposals for settlement, thus saving court costs and ensuring mesothelioma victims receive their compensation during their lifetime, taking the burden off the court system, and thus providing the “fairer and faster” system the ABI claims to want.
The proposals put forward by the ABI, including the creation of an independent body to administer a scheme, creates more questions than it answers. The insurance industry’s newly discovered concern for asbestos victims would be far better invested in making the existing system work.