Pulling the trigger

The legal battle over compensation for asbestos victims, known as the “employers’ liability policy trigger litigation” trial, started on 3 June and the hearing is expected to last eight or nine weeks. There is much at stake, not only for insurers but also for companies, not to mention the mesothelioma sufferers and their dependents.

The dispute stems from the long period of time between exposure to asbestos and the development of a malignant mesothelioma tumour (as much as 50 years), and between the start of the tumour growth and the onset of symptoms (generally taken as 10 years).

Guided by expert medical opinion, English courts in recent times have ruled that injury occurs in mesothelioma cases no earlier than the time that the tumour begins to develop (Bolton Metropolitan Borough Council vs Municipal Mutual Insurance). This is in contrast to an accident at work, where the negligent act and the injury occur, if not simultaneously, then within a short period of one another. In the accident at work scenario, it is academic whether the trigger for cover is the accident itself or the employee’s suffering an injury. Either way, the policy will cover it.

No such assumption can be made in mesothelioma cases because of the latency periods. Notwithstanding, for many years the insurance industry has proceeded in mesothelioma cases upon the basis that the trigger for cover in employers’ liability (EL) policies was the act of exposure to asbestos. Many EL policies contained the wording that cover was in respect of “injuries caused during the period of insurance” and the approach was to focus on the date of the cause rather than the date of the injuries.

By contrast, public liability (PL) policies were apt to offer cover in respect of “injuries or illnesses occurring during the period of insurance”. So it was that in 2006 in the Court of Appeal, Municipal Mutual (MMI) was held liable to indemnify its assured, Bolton council, under a PL policy where MMI was the PL insurer when the third party developed mesothelioma. Essentially this meant that injury, not cause, triggered the policy.

Other insurers also began to look at the triggers in their EL policies. Builders’ Accident Insurance’s original policy was triggered by any injury or disease “contracted during the currency of the policy”. Excess’ policy trigger was the “sustaining of personal injury by accident or disease arising out of and in the course of employment”. These insurers now argue that the trigger for their EL policies is the onset of injury.

A company may find itself uninsured in respect of a particular claim because, even though it had the same insurer throughout, the wording of the policy has changed

 

The case currently being heard by Mr Justice Burton in the High Court will be considering the meaning and effect of each of these and other triggers in EL policies. The judge will also consider whether the practice of EL insurers over the years in working upon the basis that liability was triggered by exposure means that they are now not permitted to argue to the contrary.

The importance of this case cannot be overstated. Many companies switched insurers over the years. The judgment could lead to those insurers being found to have had different liability triggers under their EL policies. For example, suppose a company took out EL insurance with insurer A, the trigger for which is found by the court to have been the development of a disease during the currency of the policy. Some years later, that company swapped EL insurers and took out a policy with insurer B, the trigger being found by the court to have been exposure during the currency of the policy.

In such circumstances, the company will have no insurance cover in respect of a claim by an employee exposed during the period that it held EL insurance with insurer A.

A company may also find itself uninsured in respect of a particular claim because, even though it had the same insurer throughout, the wording in the policy has changed.

Mr Justice Burton is not expected to produce a judgment until the autumn. In the meantime, it would be prudent for companies to search their archives and compile a dossier of copies of EL policies that they have held over the years so they know whether and what asbestos cover they have had in place.