Home - Equitas on hook for full asbestos award

A High Court ruling that an insurer must pay the entire damages awarded to a mesothelioma victim, despite its limited time as insurer for the man's employer, could encourage insurers to agree to a market-wide mechanism for apportioning asbestos-related claims, according to the Assn. of British Insurers.

The ruling against Equitas Ltd., which has assumed the liabilities of defunct Lloyd's of London syndicate 992, follows the joint and several liability approach for asbestos claims adopted in the House of Lords in the closely watched Fairchild case last year.

U.K. High Court Judge Eady ruled May 14 that Equitas must pay the full compensation owed by Kinkia Ltd. to the widow of mesothelioma victim Arthur Phillips, even though syndicate 992 was the company's insurer for only a part of Mr. Phillips employment.

Mr. Phillips was employed by Kinkia between 1955 and 1957 and between 1959 and 1970. Kinkia, formerly known as Thermac Insulation Ltd., was dissolved in 1979. Syndicate 992 was Kinkia's insurer between 1959 and 1968. In October 2002, Mr. Phillips' widow was awarded total compensation of £205,000 ($334,430) from Kinkia.

Equitas paid all but £56,375 ($91,625), arguing that it was only liable for the portion of damages corresponding to the proportion of time it was on Kinkia's risk. Mrs. Phillips sued for the remaining amount plus interest.

Judge Eady ruled that continuing exposure to asbestos fibers over the claimant's entire employment was a material contribution to his contraction of mesothelioma, including the period during which syndicate 992 was insurer. The judge held that the Fairchild ruling meant that it was irrelevant whether the fatal fiber may have been ingested during a time the syndicate was not insurer, ruling the insurer was liable for the full amount.

The judgment is one of the first mesothelioma rulings to follow the House of Lords ruling and confirms the degree to which the earlier decision will impact insurers, lawyers agree.

"This is a significant ruling that confirms that insurers must pay full damages not partial. It is an important test case that will assist other claims pending," said Rodney Nelson-Jones, partner in the London law firm of Field Fisher Waterhouse, who acted for the claimant.

"Unfortunately, apportionment was not fully argued in the House of Lords, which was a missed opportunity. (The Phillips case) was an attempt to reduce the impact (of Fairchild) on insurers," said Simon Chandler, senior lawyer with CMS Cameron McKenna in London.

Although the ruling will disappoint insurers it "has helped to clarify the approach we want to take" and should remove some of the doubt insurers may have had about the need for an apportionment mechanism, said Alistair Finley, policy advisor on liability at the ABI in London.

Draft guidelines for an apportionment agreement recently were sent to the ABI members and the trade association hopes to have a final agreement in place later this year that would allow insurers to apportion and settle mesothelioma claims without going to court, he said.

Mr. Finley said he hopes that reinsurers, employers and the government also will adopt the guidelines.

A spokesman for Equitas said the decision confirms Fairchild and Equitas will not appeal.

"It would have been extremely difficult for the judge to have ruled any differently" because of Fairchild, noted Margaret Thomas, an associate lawyer for London law firm Davies Arnold Cooper.

The ruling demonstrates the difficult plight that insurers now are in, she said.

As asbestos claims continue and more insurers become insolvent, those surviving will pay larger percentages of each claim. It's a question of "last one, turn out the lights," said Ms. Thomas.

The ruling against Equitas follows the joint and several liability approach for asbestos claims adopted in the House of Lords in the closely watched Fairchild case last year.

By: Carolyn Aldred