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It's pay day for insurance executives if they cut asbestos claims

Four companies wage 'totally cynical' fight to reduce payouts to victims

Emily Dugan
Sunday 09 October 2011 00:00 BST

Highly paid insurance executives fighting a legal battle to limit compensation to the families of thousands of asbestos-related cancer victims are being rewarded with lucrative bonuses.

The insurers were criticised yesterday for taking home bumper pay packets and bonuses while refusing to pay out to families whose relatives have died from the disease.

One executive, Ian Willett, of Municipal Mutual Insurance (MMI), which has £85m at stake in asbestos cases, told a court that he and a second executive were paid extra for saving his company money in asbestos payments. He admitted the successful outcome of the asbestos litigation was likely to affect his bonus.

MMI is one of four companies that are leading a fight to minimise payouts to 25,000 families who have a member who has died or is suffering from mesothelioma cancer resulting from exposure to asbestos. The other three firms are Builders Accident, Excess and the Independent Insurance Company.

Asbestos exposure is the biggest killer in the British workforce, causing more than 4,000 deaths every year – more than road traffic accidents. The fibres can be in a person's lungs for half a century before causing cancer, so that deaths in the UK are not expected to peak until 2016.

The insurers' case, which goes to the Supreme Court in December, argues that employer's liability is restricted to when the cancerous tumours started to develop instead of when victims were exposed to the deadly dust. Decades can pass before the cancer develops. If the insurers lose, the compensation bill could be in excess of £250m.

The move by the four companies is seen as controversial and most insurers are distancing themselves from the case. A spokesman for the Association of British Insurers said: "This is being brought by a small group against the views of the majority of UK insurers. Most active insurers are happy to pay to people with employers' liability policies."

It has not been possible to establish the details of what – if any – bonuses were paid to other company executives but insurance industry experts say it is common practice for executives to receive bonuses that are related to the financial performances of their companies.

Lawyers specialising in asbestos claims called the insurers' argument "hugely cynical" and said: "It flies in the face of all existing evidence that the exposure is the key date, as it is well accepted that symptoms take up to 40 years to show." They claim that, while lawyers argue, thousands of sufferers are dying not knowing whether their families or loved ones will be financially secure.

Professor Geoffrey Tweedale, an asbestos historian at Manchester Metropolitan University, criticised the insurers for bringing the case. "It's an attempt by the insurers to quibble over the words and find an escape route. It's totally cynical to argue over when a tumour starts."

Officially, the insurers' side declined to comment but legal sources deny financial opportunism or cynicism is behind it. One lawyer, speaking on condition of anonymity, said: "This case is about what the contracts say. The Court of Appeal took that view [about the contract wording]. We will see what the Supreme Court says."

Victims' lawyers say medical experts – whose advice would have guided insurers – knew as early as the 1930s that exposure to the lethal asbestos fibres could take up to half a century to kill workers.

Many building firms that employed people to work with asbestos fibres in the 1960s and 1970s no longer exist. As a result, losing the court battle will leave some families with no compensation at all, despite their employers having paid insurers to protect against worker injury in good faith.

Hugh Robertson, the head of health and safety at the Trades Union Congress, said: "The real injustice is that the insurers took the money. They had no qualms in taking the insurance policies from employers who believed their workers were insured, and now they're doing everything to wriggle out of their commitments. Whether they were legal commitments the courts will decide, but they certainly have moral commitments. However, the insurance industry has spent the last decade trying to avoid their moral responsibility in respect to people with asbestos diseases."

The TUC says that insurers are using many different methods to cut down the cost of claims. "This is only one of a series of challenges and attacks that people have had to face when trying to get compensation for employers' negligence," said Mr Robertson. "In addition to the court case, the insurance companies have been lobbying hard to make sure the courts can't be used in the future."

Professor Tweedale said the court case was "part of a strategy to slow down or avoid claims" so insurers could save money. "The background is the rising number of mesothelioma cases and compensation claims, so it's part of a strategy by the insurance industry to cut the bill," he said. "For the insurers, it's about business – they're not in it to toe an ethical line – but for the victims it can be a necessity to get compensation when they lose a breadwinner. It's also an attempt to hold someone responsible, particularly if there's negligence. Most victims do not get adequate compensation; that's been the case throughout history."

Jim Sheridan MP, chairman of the All-Party Parliamentary Group for Health and Safety, which has been urging the creation of a "fund of last resort" for victims of asbestos exposure for those who cannot trace their employers' insurance, has said the Government is silent on this insurance-funded initiative and is expected to delay it until after this case has been concluded. "The people paying the bonuses have to reflect on what they're doing," he said.

Additional reporting by Nicky Pear

Court timeline: The five-year battle over compensation

1967 First mesothelioma claim. From then on, industry practice is for the insurer who covered the victim's company at the time of exposure to pay compensation.

2006 Court of Appeal rules in Bolton MBC vs MMI that for insurance purposes a person with mesothelioma suffers an injury for the first time when the tumour starts to develop, 10 years before symptoms, rather than at the point of exposure which is usually 30 years earlier.

2007 Municipal Mutual Insurance issues proceedings against Zurich insurance and 10 local authorities on the basis that Bolton ruling could be applied to their liability.

2008 "Trigger" case over when insurers are liable is heard in the High Court. It rules in favour of all asbestos victims.

2009 Case goes to the Court of Appeal which gives a muddled ruling. Neither side is satisfied and leave was granted for an appeal to the Supreme Court.

December 2011 Case due to be heard in the Supreme Court.

Case studies...

Roy Dearden, 65, Doncaster

Roy Dearden is dying of mesothelioma after breathing in asbestos while working as an industrial painter when a teenager

"In January I was gasping for breath whenever I walked up a slope. At first the doctor thought it was bronchitis, but two weeks later I heard I had lung cancer and it was asbestos-related.

"I couldn't think where I'd got it until my brother reminded me about painting in the roof at ICI Fibres – I'd been covered in dust afterwards. At the time, we just thought it was dust but all the machinery was lagged with asbestos.

"They gave me 12 to 14 months to live. I didn't expect to be on death row at 65.

"If they paid the compensation I could do what I wanted to for my family, which would give me peace of mind. I think it's shoddy how they've gone about it."

Maureen Edwards, 55, Bootle, Sefton

Maureen Edwards lost her father, Charles O'Farrell, to mesothelioma

"On 17 October, it will be eight years since Dad died. The family has been fighting for compensation ever since because it's what he wanted. My dad was a steel erector and was exposed in a gasworks. With six kids at home, if he had known that his employers weren't fully covered he wouldn't have gone to work for them. The employer also thought he was insured. Someone here should take the blame.

"Our youngest sister, Linda, 47, has learning difficulties and he wanted us to pursue it for her. My dad was her sole carer after mum died 16 years ago. She died from lung cancer and we wonder now whether it was from washing his clothes."

Stella Lowe, 56, Wigan, Greater Manchester

Stella Lowe lost her husband, Dennis, to mesothelioma last year after he worked with asbestos as a decorator in the 1960s and 70s

"Dennis would sometimes come in with his eyebrows covered in dust. He had no mask at all and his employers never told him to protect himself and that this was a dangerous material.

"We had to put adverts in papers to track the insurers. When they didn't want to pay, I said: 'How can anybody do this when they see what they're doing to Dennis?' They just don't care; they don't take you as a family and what it's doing to you. Dennis lost his life and we lost a loving father when he'd just had his 58th birthday. I have a 25-year-old daughter, Katy, and a 23-year-old son, Jonathan, who is profoundly disabled. Dennis did everything with him."

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