Insurers warned UK asbestos payouts could soar to £20bn

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The Independent Online

The cost of asbestos-related illnesses in the UK could amount to £20bn over the next 30 years, with the UK insurance industry expected to foot up to half the bill, a new report from the Actuarial Profession shows.

The cost of asbestos-related illnesses in the UK could amount to £20bn over the next 30 years, with the UK insurance industry expected to foot up to half the bill, a new report from the Actuarial Profession shows.

Although the use of the two most dangerous types of asbestos has been banned in the UK since 1987, and the use of all three types has been banned since 1999, the report predicts the number of people falling ill from asbestos exposure could continue to rise for another 15 years. The number of claims is expected to total between 80,000 and 200,000 over the next three decades, the report said.

The most severe asbestos-related illness, mesothelioma, can take up to 50 years to manifest itself, after which its victims usually die within just two years. The average claim from someone who has contracted mesothelioma is about £100,000, with its victims expected to account for at least half the insurance industry's total asbestos-related bill. By 2015, the report predicts, there could be more than 2,000 deaths a year from mesothelioma.

The second-most severe asbestos-related illness, lung cancer, also generates average claims of £100,000 per patient. However, it is often difficult to prove that the cancer has been caused by exposure to asbestos. A third illness, asbestosis, which rarely proves to be fatal, merits claims of about £50,000.

A test case to decide the level of compensation which should be paid to victims of lesser asbestos-related illnesses - so-called "pleural plaques" and "pleural thickening" - is to begin in the UK this month. The industry is hoping that the judge will rule that no compensation should be paid in the most minor cases.

These illnesses are relatively benign and have minor, if any, symptoms. However, in the US, claims for these less severe conditions have soared after companies began offering free chest X-rays to staff who have been working with asbestosis. Most of these live healthy lives, but have still managed to secure one-off payouts of up to $20,000.

The Actuarial Profession's study is the most comprehensive snapshot of the asbestos crisis to date, and was compiled using confidential data from the insurance industry.

Although insurance companies are set to pick up about half the total bill, the remainder is set to fall at the feet of the Government and individual companies, who did not have insurance cover, but employed people in an environment where asbestos posed a risk. Employers' liability insurance did not become compulsory in the UK until the early 1970s.

Overall, the study estimates that the total UK asbestos-related costs will fall between £8bn and £20bn, while the cost to the insurers will be between £4bn and £10bn.

Julian Lowe, the chairman of the working party which wrote the report, said: "Asbestos is certainly not yesterday's problem - its effects will continue to affect insurance companies and healthcare providers in the West for decades to come.

"Perhaps of more concern are the appalling demographic and social consequences of asbestos manufacture and the use that will inevitably be seen in the developing world over the next 30 to 50 years. Urgent action therefore needs to be taken by the international community to help those nations learn the lessons of Western Europe and North America."

Mr Lowe said that although most developed countries have agreed not to continue manufacturing asbestos, there have been some notable exceptions, such as Canada. Russia, Thailand, Brazil and China are still major users of asbestos. Mr Lowe says in spite of lobbying by Europe and the US, more asbestos is being used in Asia today than was being used in the US at its peak 30 to 40 years ago. As well as being used for the likes of insulation and fire-proofing, the carcinogenic material has been used for objects such as making socks, gas masks and cigarette filters.

The study comes almost 10 years after the creation of Equitas, the reinsurance plan which was created to save the Lloyd's of London insurance market from collapse at the hands of asbestos-related claims. Several Lloyd's Names who refused to join Equitas are still embroiled in legal battles with the London insurance market over money demanded for asbestos-related claims.