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Government and insurers agree asbestos compensations


The uncertainty of asbestosis sufferers and their families whose expectation of compensation was thrown into doubt by the insolvency of Chester Street on 9 January this year will soon be over thanks to a partnership between the insurance industry and Government.

Andrew Smith MP, Chief Secretary to the Treasury, said, “This is good news for asbestosis sufferers and their families whose personal tragedies were made even worse by uncertainty over whether they would receive the compensation they were due following the collapse of Chester Street. It is also an excellent example of partnership between Government and the private sector, in which the Government is meeting its liabilities to former public sector employees and the insurance industry is covering claims from former private sector employees.

“I would like to pay tribute to the constructive and cooperative approach taken by the insurance industry, who have shown great flexibility in dealing with a very complex legal situation”

Concerns had been raised over the position of employees whose private sector employer insured with Chester Street and no longer exists or is insolvent, and whose injury was sustained during employment in the private sector before 1972 (1975 in NI). There were fears that these individuals would not receive the compensation for which their employers would have been liable.

However, the insurance industry will fund compensation to those individuals in the following circumstances.

– The Policyholder’s Protection Board (PPB) will make payment in accordance with their statutory powers if the compensation award was made prior to Chester Street’s insolvency on 9 January 2001.

– If the award was made on or after 9 January, the insurance industry will fund equivalent payments pending the implementation of the new industry funded Financial Services Compensation Scheme (FSCS), planned to come into effect no later than November this year.

The Financial Services Authority (FSA) have been asked to explore rules to cover employee third party rights in employer liability cases to ensure that in cases where both the employer and the insurer are insolvent, victims receive compensation.

The Government will itself fund the compensation owed to former employees of public sector companies for whom it is liable.

The arrangements outlined above apply only when the employer no longer exists or is insolvent. Where the employer still exists, or its liabilities have been carried forward to another company, that company or firm are liable to pay the compensation award.

Andrew Smith was responding to a Parliamentary Question from Tony Worthington MP (Clydebank & Milngavie).

TUC welcomes justice for asbestos workers

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