Years of practice in the insurance industry regarding indemnity of insureds in asbestos claims could be over-ruled by test cases currently pending before the High Court in England.
In June 2008, six lead test cases in the Employers’ Liability ‘Asbestos Trigger Litigation’ were heard. The issue being considered was which EL policy should respond or “trigger” in an asbestos claim; the one providing cover on the date that the exposure to asbestos took place, or the one providing cover when the individual developed the symptoms of an ‘asbestos-related’ condition.
Historically, the policy that triggered was that in existence when the exposure took place, irrespective of the wording of the policy. The insurers in the test litigation are seeking to argue that when the policy wording states that it covers ‘injuries occurring’ during the period of the policy, then that policy will not respond until the symptoms have developed, which with asbestos conditions is usually many years after the exposure took place. They say that no injury has occurred until symptoms arise.
The same issue was considered in relation to public liability claims by the English Court of Appeal in February 2006 in the case of Bolton Metropolitan Burgh Council v Municipal Mutual Limited and Commercial Union Assurance Limited [2006] EWCA 50. The specific wording of the policies was that they would indemnify in respect of claims arising out of “injury occurring” during the period of the policy. The court therefore looked at the meaning of the words “injury occurring” to assess where the risk of the claim attached. The court held that the public liability policy that responds in that scenario is the one in existence when an asbestos related disease develops. This effectively has the effect of treating PL cover in mesothelioma claims as short tail.
The trigger litigation decision is still awaited, but whatever the decision, an appeal is expected by the unsuccessful parties. It is likely that a final decision will not be available until the House of Lords has been given the opportunity to consider the issue.
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Joanne Farrell