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Our thinking

Ian Harvey

Head of Claims Strategy

Worker’s Compensation and Asbestosis in the Lloyd’s Market

As one often does on the streets of EC3, I recently bumped into a ‘London market face’ and we had the what-are-you doing-now conversation. My former colleague remarked how things had changed in the market from when we both set out on our insurance careers; how the market had become more professional, and how the things that had blighted it in our formative years – the collapse of the Sass syndicate, the infamous LMX spiral, the claims and bankruptcies resulting from Asbestos - had all gone away.

After we parted, I thought about what he had said and, like the American TV detective Lieutenant Columbo, there was just one thing bothering me. Asbestos. Gone away.

Asbestos reared its very ugly head in the insurance market around the late 1980s and early to mid-1990s becoming the most prevalent industrial disease covered under Employers' Liability or Workers' Compensation policies. Fuelled by unexpectedly large legal awards in US courts, the claims spiralled and, in the case of Lloyd's, many individual names went bankrupt as their syndicates had indemnified general liability insurance written from the 1940s to the mid-1970s for companies with exposure to Asbestos claims.

To be clear, Asbestosis is the condition resulting from exposure to asbestos and is usually associated with professions such as construction workers, especially laggers and shipbuilders. This was a consequence of the widespread industrial use of asbestos from the 1950s to the 1980s. While a potentially disabling condition, worse was to come in the form of Mesothelioma, a cancer that can take many years to develop following the inhalation of asbestos fibres.

 


 

Mesothelioma is invariably fatal. There are no recorded cases of anyone having survived for more than a few years. The period from first diagnosis to death is on average 15 months.

The latency period for the disease is at least 30 years, and could be anything up to 40 following exposure, whether light or intermittent. Mesothelioma is responsible for a predicted 2,500 deaths a year in the United Kingdom alone.

This is truly a dreadful disease.

Actuaries predict that Asbestosis claims will run on until the 2050s. It is estimated that the cost of UK asbestos-related claims to the insurance market could be up to £11 billion for the period 2009 to 2050, of which 90% relate to Mesothelioma.

It was good to see my old colleague again and despite this being such a sombre topic, it made me wonder if his comment reflected the current mindset of not only the London market, the UK general insurance sector, but the global (re)insurance industry itself. The UK has the highest rate of Asbestosis in the world. Clearly it is the biggest ongoing issue in industrial related diseases - and it’s not going away soon, despite no longer grabbing the headlines.