BIBA response to Department of Finance and Personnel Consultation Paper CP 02/08
14th January 2009
The British Insurance Brokers Association (BIBA) is the UK’s leading general insurance intermediary organisation. We represent the interests of insurance brokers, intermediaries and their customers.
BIBA represents 2,300 insurance intermediaries including 98 of the UK’s top 100 insurance intermediaries. Our members handle about half by value of all UK home, contents, motor, travel, commercial and industrial insurance policies. Independent insurance intermediaries distribute nearly two thirds of all UK non marine general insurance, of which BIBA members account for over 80%. They also introduce £20 billion of premium income into London’s insurance market each year.
The initial consultation was produced following the House of Lords decision in the case of Johnson v. NEI International Combustion Ltd, where the Law Lords upheld a Court of Appeal decision that the existence of Pleural Plaques does not constitute compensatable damage.
The Department of Finance and Personnel consultation paper discusses ways to assist people with pleural plaques by support, overturning the House of Lords judgement, and a no fault compensation scheme.
Response to Questions
Question 1: Do you think information leaflets on pleural plaques would be useful? If not, why not?
The main approach should be by education and information. Leaflets or a website information page should be a part of this, and effort should be made towards education of everyone concerned, such as potential claimants, lawyers, trade unions, press by as many means as possible. Care will be required to ensure that the distribution of information does not spread panic and lead to unnecessary additional pressures on the NHS with demands for X rays and investigations by significant numbers of the public. It should be remembered that the majority of people who have worked with asbestos do not have a medical condition, and there is no established link between pleural plaques and other asbestos based diseases. An appropriate mechanism for the distribution of information could be at the following levels:
Level 1: via GPs, Hospitals and NHS Direct
Level 2: an overview to the general public distributed via CABs and other outlets
It is very possible that any publicity in respect of pleural plaques (even if designed to alleviate concerns) will spark a number of questions and queries to GPs from patients who may have worked with or otherwise may have been exposed to asbestos at some time. Many non-specialist medical professionals may themselves not fully understand some of the issues with pleural plaques.
The suggested Level 1 information for GPs etc should be a detailed technical medical explanation and prognosis of this condition including the appropriate medical references. The suggested Level 2 information should be written to enable the general public to understand the condition without causing any undue concerns. The Level 1 publication should be restricted to medical professionals with the Level 2 publication readily available to the general public. Both versions should be available to view on the government web.
Question 2: Would you support the creation of a register? Please give reasons for your answer
No. This would be unwieldy, expensive and ultimately of little utility.
Question 3: Do you have any information on settlement figures and associated legal costs or any estimates regarding:
v The number of people currently diagnosed with pleural plaques;
v The future number of people who will develop pleural plaques;
v The future distribution of pleural plaques cases;
v The period of time over which people will develop pleural plaques;
v The number of people diagnosed with pleural plaques prior to the House of Lords decision and who have not received compensation.
BIBA has no information on this.
Question 4; Do you think legislation should be introduced to overturn the decision in the Johnston case?
At present, the law of negligence allows for compensation where a negligent act causes bodily injury and damage as a result. Any change in legislation would set a precedent in other areas for compensation and in turn could cause the insurance market to have unpredictable claims where there are no reserves. This is likely to destabilise the liability insurance market.
The Law Lords have reviewed and established beyond doubt the three criteria which must all be present before there is a cause of action for damages for personal injuries due to negligence or breach of statutory duty as follows:
- A negligent act or breach of statutory duty by the defendant
- The negligent act causes an injury to the claimants body
- The claimant must suffer material damage as a result
Our view is that these three elements form the bedrock of the Common Law concept of negligence and its compensation, and as such, should not be undermined. To do so runs the risk of creating a seismic shift in the whole basis of liability with eventual results that at this stage may well be unexpected, unsuccessful, and unwanted.
Of further concern is the potential for “cross border forum shopping” if the Scottish Parliament decide to make this a compensatable disease.
To introduce legislation to overturn the House of Lords decision would be to undermine the whole concept of negligence.
Question 5; If you do think legislation should be introduced, would you favour legislation which –
(d) restricts claims to those who had been diagnosed with pleural plaques before
the Johnston case?
(e) allows anyone who has been diagnosed with pleural plaques to claim?
(f) follows the Bill in Scotland by covering pleural plaques, pleural thickening and
BIBA believes that legislation should not be introduced.
Question 6; Do you think there is a danger that legislation will create a privileged class of claimant or set an unhelpful precedent?
Obviously it would. It would open the possibility of claiming for other symptomless conditions; even those unrelated to asbestos exposure.
Question 7; Do you support the option of a payment scheme for pleural plaques? If so, how would you see the scheme working? In particular, what level of payment would be appropriate and should a limitation period be applied?
No. Commercial insurers would not fund a payment scheme where the underlying issue is not actionable in law. Hence it would be a straightforward drain on general taxation.
If there is no legal liability, then insurers should not compensate. Any attempt to involve insurers in a compensation fund could lead to destabilising the liability insurance market and insurers will need to very quickly pass on these costs to insureds via increased premiums. We would not support a fund involving the insurance industry and this does raise questions on any potential fund in terms of contributors.
Any fund that may be considered to pay compensation should, in our view, extend to include all persons where medical evidence indicates that the person has pleural plaques and not limited to compensate individuals in circumstances where the pleural plaques are allegedly caused by work related conditions.
We would stress that such a compensation scheme should not be funded, in full or in part, by the insurance industry. There is no obligation within the insurance contract between insureds and the insurers to pay into such a fund where there is no legal liability on insurers to pay such compensation and no reason within the terms of the insurance contract for such payments to be made.
In terms of no fault fixed payments, this would create unfairness in compensating people who have not suffered an injury but leaving some employees who have been injured or suffered other illnesses not being compensated because they cannot prove negligence or their employer is insolvent and an insurer unknown.
Question 8; Would any of the identified options lead to a higher or lower level of participation or uptake by the section 75 groups or have a differential impact on the groups? Please give reasons for your answer.
No. No equality or diversity issues arise.
Question 9; Do you have any information about how a change to the law would impact on the business sector?
The most obvious impact is on the level of insurance costs to business. A more subtle and far reaching impact is on the destabilisation to the generally accepted basis of tort. It would be impossible in the long run to limit any such change just to pleural plaques, and it is impossible at present to forecast how far the effects of any such change would spread.
Question 10; Do you have any comments on the impact assessments prepared for England and Wales or Scotland?
BIBA has no information on costs, but no reason to doubt the assessments.
Pleural plaques is a symptomless condition associated with asbestos fibre exposure but unlike other asbestos related conditions, is benign and does not adversely affect the quality of life. It is not a compensatable disease falling to be dealt with by insurers. BIBA acknowledges that a carefully constructed education campaign would be beneficial to allay the myths and fears amongst the public in helping to understand the condition and to reduce anxiety.
BIBA does believe that there is every likelihood that the number of people affected in small firms has been underestimated.
BIBA does not support a different compensation culture or legislation for different parts of the UK. That will seriously add to an escalation of costs as forum shopping goes into overdrive and cause difficulties for insurers when trying to estimate for future claims costs. Insurance costs could end up being very different for different parts of the UK.
Thank you for taking the time to consider our response. If you have any further queries please contact BIBA’s Head of Technical Services, Peter Staddon on 0207 397 0204 or [email protected], BIBA’s Technical Services Manager, Steve Foulsham on 0207 397 0234 or [email protected] or BIBA’s Technical and Corporate Affairs Executive, Graeme Trudgill on 0207 397 0218 or [email protected] for further information.