Tag Archives: Employer’s Liability

The Supreme Court handed down judgment in the employers’ liability policy trigger litigation on 28 March 2012. This overturns the Court of Appeal’s judgment of 08 October 2010 regarding the meaning of “disease sustained” policy wording in employers’ liability (EL) cases and reinstates the market practice that policy cover for mesothelioma claims is triggered by the date of exposure to asbestos and not by the deemed date of injury many years later.

This Adviser provides a recap on the developments leading up to this judgment and what effects the Supreme Court’s decision has on businesses.


Bolton v Municipal Mutual Insurance (MMI) set the scene in 2006. This was a public liability (PL) case in which it was held that in a mesothelioma claim, injury “occurs” when the tumour starts to develop, ten years prior to the onset of symptoms.

The EL policy trigger litigation arose because four insurers (Builders Accident Insurance, Excess Insurance, Independent Insurance and MMI) had EL wordings with ‘disease sustained’ or ‘disease contracted’ in their EL policies. Those insurers felt these were worded in a similar way to the Bolton PL policy and therefore decided to decline claims on the basis of the ruling in the Bolton case.

A group of claimants sought to reverse the stance taken by these four insurers by issuing proceedings which became known as the employers’ liability policy trigger litigation.

The High Court

The High Court reached a decision in November 2008 and found that whatever the wording was in an EL policy, the policy was to be construed as having been triggered by the date of inhalation. Therefore, it was the insurer who was on risk at the date of inhalation which was liable to indemnify in respect of the disease.

  • EL policies using disease ‘sustained’, ‘contracted’ or similar wording were to be interpreted to mean the same as ‘caused’ during the policy period.
  • The ‘caused’ date was the period of exposure to asbestos.
  • A “causation” wording was necessary in an EL policy in order to give effect to the intentions of both parties and to meet an employer’s obligations under the Employers’ Liability (Compulsory Insurance) Act 1969.
  • The observations forming part of the detailed medical views indicated that the mesothelioma tumour could first occur only five years prior to the onset of symptoms.

The Court of Appeal

The litigation was appealed to the Court of Appeal which reached a decision in October 2010. It produced a complex judgment which caused many insureds to have gaps in their EL insurance due to the different policy wordings adopted by different insurers.

The main decisions of the Court of Appeal were that:

  • Where the EL policy wording used is ‘disease sustained’, the policy which responds is the one in force when the mesothelioma tumour starts to develop.
  • Where the EL wording used is ‘disease contracted’ (deemed to be synonymous with the word “caused”) then the policy in force at the time of exposure responds.

The Supreme Court’s decision

The final appeal occupied the Supreme Court from 5 to 15 December 2011 and the judgment was handed down on 28 March 2012.

The Supreme Court held that EL policies will respond whether the wording of the operative clause is “caused”, “contracted” or “sustained”. This endorses the historical “causation” approach to policy interpretation.

The effects of the Supreme Court’s decision

  • The judgment aligns the meaning and effect of “caused”, “sustained” and “contracted” and avoids different treatments of similar EL policies.
  • The affected policyholders will no longer be forced to self-fund costly mesothelioma claims.
  • The blockage of stayed claims can now be cleared.
  • The exposure trigger applies equally to other asbestos and occupational diseases where there is a latency period between exposure and injury and therefore averts further market disruption.
  • Significant liabilities will revert back to insurers and this will have a negative impact upon their financial exposure.
  • The overall effect of the judgment is to restore clarity to the EL claims handling process.
  • There remains an issue with PL claims as to whether the trigger should be ten years or five years prior to manifestation. The Supreme Court judgment does not resolve this point.

What should you consider?

Companies should seek to assess whether they have:

  • Claims against historic EL policies with insolvent insurers.
  • A comprehensive understanding of their historic EL insurance including acquisitions.
  • Financial provisioning in place to meet the cost of future uninsured mesothelioma claims.
  • Claims which now fall within policies with these insurers.

How can we assist you?

With Insolutions’s skills, resources and award-winning initiatives* in the field of disease liabilities and insurance archaeology, it is very well placed to meet the needs and requirements of any company with such liabilities; and not only in relation to short-term benefits but in relation to lasting corporate solutions.

For further information, please contact :

Ian Pelham
Marsh Risk Consulting
Insurance archaeology

Bill Kirkham
Occupational Disease Claims Practice
Marsh Global Claims

* Winner of the Manchester CII Insurance Awards 2011 – Claims Initiative of the Year

The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.

In the United Kingdom, Marsh Ltd. is authorised and regulated by the Financial Services Authority for insurance mediation activities only.

Many companies in the UK are facing historic Employers Liability (EL) claims often driven by asbestos claims. Due to age of these claims and the diversified nature of many companies they are unable to trace their historic EL policies.

Can you locate your historic insurance coverage?

Due to the age of these documents, companies all too often find they are unable to trace the coverage they need. Company mergers and broker changes compound this inability. The net result is files are moved and forgotten, and personnel with crucial institutional knowledge retire or relocate.

Insurance archaeology and legacy research service Marsh Risk Consulting Insurance archaeology and legacy research service Marsh Risk Consulting InSolutions, Marsh’s dedicated insurance archaeology practice, can assist companies in locating lost policies. Working in close collaboration with clients, our experienced archaeologists can locate historical insurance assets through comprehensive research in areas such as:

  • Research and internal reviews of historic corporate records and archives
  • Interviews with current and former personnel such as risk managers, finance directors, and corporate counsel
  • Site visits to review clients archives
  • Research and contact with former brokers and insurers
  • Identification and contact with various outside sources such as government entities, local records offices and accounting firms.

Getting started

Prior to any research project our archaeologists will contact or meet with you to thoroughly discuss the scope of the project, determine coverage gaps, obtain additional information on the history of any pertinent companies (including predecessors) and determine what research may have already been undertaken. After completing these initial steps, our archaeology team will provide a comprehensive proposal detailing specific research steps to find lost policies.

Case study 1

Our client, a publishing house, had acquired another publishing company and then received a number of legacy employers’ liability claims for printing works that it was not aware of via this acquisition.

InSolutions reviewed the claims papers and was able to:

  • Redirect a number of the claims as the printing works in question had previously been sold to a third party
  • Locate the (EL) insurance for the balance of the claims for the majority of the period in question

Due to our assistance, the client has been able to redirect these claims to third party owners or to the relevant legacy insurance carrier thus potentially saving hundreds of thousands of pounds.

Case study 2

Our client purchased a regional tyre and exhaust chain. The profit margin was around 11% per annum, claims ratios were low, and there is an acceptable level of staff turnover.

After the purchase, they received a number of legacy claims and InSolutions was asked to trace the insurance history.

We found:

  • Eight sites which had previously been owned by a tyre company, which in turn bought four of these businesses from garage owners, one from a timber merchant, and two others from a supplier of coal and central heating oil
  • For the sites the vendors had assumed the past liabilities of 14 companies ranging from an assortment of businesses, with the majority of the businesses being potential producers of asbestos related claims

Aside from having to trace 14 separate insurance histories for the client we suggested that they arrange underground surveys of all sites.

Of the 17 sites they owned, eight showed that underground oil storage tanks were still in situ, with three such tanks near a local river. The cost of removal of the tanks was estimated at £2 million.

Fortunately, through InSolutions the client now has EL coverage back to the 1960s and public liability cover for some of these companies.

The white paper – in association with the Marsh Occupational Disease Claims Practice, offers a review on the impact of asbestos exposure in the higher education sector

Executive summary

It is clear the education sector is impacted by claims arising from asbestos exposure. There are some 301 establishments within the sector and many have their origins in the post war expansion of the sector, when the use of asbestos was widespread. Furthermore, many of the occupations which according to the Health and Safety Executive (HSE) report (HSE: HSG264) involved a potentially injurious exposure to asbestos are found in the education sector. The University and Higher Education sector in the UK expanded dramatically from 1945, both in terms of infrastructure and number. This expansion was juxtaposed by a national rise in post war construction and development, which made extensive use of asbestos. This scenario has left a legacy which Universities need to consider when managing their potential future liabilities. Our research shows the risks associated with the use of asbestos impact both longstanding and ‘new’ universities alike. Most buildings constructed prior to 1999 contain asbestos, in varying quantities and to varying degrees of toxicity. This represents a high percentage of university infrastructure. Universities need to fully understand the potential for employers’ liability (EL) claims as a result of mesothelioma and to manage the financial risk of such liabilities.

Please download the white paper Mesothelioma White Paper-v1

In October, the Court of Appeal in London handed down a long-awaited judgment in the Employers’ Liability Policy Trigger litigation (also known as Durham v BAI). The decision of the Court of Appeal, which reversed the effect of part of the first instance High Court judgment, has given rise to significant uncertainty in this complex area of law. A number of aspects of the decision are likely to create coverage issues for policyholders in relation to claims under employers’ liability policies in relation to mesothelioma, and possibly also other diseases, and may lead to a review of the law in relation to public liability policies.
This seminar will cover both legal and practical issues that will need to be faced by corporate policyholders while the uncertainty created by the Court of Appeal’s decision remains.

Topics Covered:

Introduction: The significance of ƒƒDurham v BAI
Anne Ware, Partner, Covington & Burling LLP

An analysis of the Court of Appeal’s judgment and the legal implicationsƒƒ
Richard Mattattattick, Of Counsel, Covington & Burling LLP

Practical implications of the decision, including the importance of locating ƒƒpolicy wordings, claims reporting issues, market reaction, and practical examples
Bill Kirkhamam, Occupational Disease Claims Practice Leader, Marsh; and
Ian Pelhamam, Senior Vice President, InSolutions Ltd (a Marsh company)

For more information please contact Ian Pelham


Marsh, the world’s leading insurance broker and risk adviser, is advising organisations to examine their potential exposures to asbestos-related claims ahead of a predicted peak in 2016.  Marsh’s advice follows its publication of new research on actual mesothelioma cases before the Queen’s Bench Division of the High Court of Justice in London which highlights the range of UK occupations and industries affected by diseases such as mesothelioma.

The research reveals that only one-quarter (27.5%) of the claims analysed were found to involve organisations operating in the mechanical, electrical and process engineering industries. The rest of the cases examined emanated from claims in the chemicals industry (11%); construction (7.5%); metals and minerals (6.5%); and the electronic products, electronics and IT hardware sector (6.5%). The final settlement values in the cases reviewed ranged between £50,000 and £200,000.

Over a third (36%) of the cases examined were from 1956 to 1960, making it likely that initial exposure would have been 40 years prior to the effective start of a claim. This indicator, supported by data from the Health and Safety Executive which indicates UK mesothelioma claims are expected to peak in 2016, suggests that it is likely that affected employees will have been exposed to asbestos between the late 1960s and mid 1970s.

Marsh’s research also suggests that widespread publicity surrounding mesothelioma claims is impacting on the number being made by dependants which, at 47%, is almost as many as the number instigated by principals (53%).

Marsh’s new White Paper, Mesothelioma Claims, which was produced in conjunction with the University of East Anglia (UEA), examines 15% of the court cases commenced between September 2006 and October 2007 in the Queen’s Bench Division of the High Court of Justice in London and assigned to Senior Master Whitaker, the Senior Master of the Supreme Court of England and Wales, Queen’s Bench Division, Royal Courts of Justice, and the Queen’s Remembrancer.

Ian Pelham, who oversaw the research project with UEA and is a Managing Consultant at InSolutions, part of Marsh’s Risk Consulting Practice, commented: “Marsh’s research highlights that few, if any, industries are immune to the  possibility of mesothelioma claims arising from past employment practices.

“Mergers and acquisitions in the second half of the 20th Century, followed by a contraction back to ‘core business’, has resulted in many organisations now being unaware of their potential exposures to asbestos-related claims.

“With the fast track approach to claims, championed by Senior Master Whitaker, in place in the courts companies now have a very limited time window to locate their legacy employers’ liability coverage, once they received notice of a potential claim.

“If companies have not yet investigated their potential future liabilities, it would be prudent to do so now. They should ensure that they review and understand their corporate histories and that, where available, they catalogue copies of their old employers’ liability policies and store them safely. If a company becomes aware of a potential gap in its insurance record relating to a site that might give rise to a mesothelioma claim, it is advised to investigate whether the insurers from that period can be found.”

Terry Kendrick, MBA Programme Director, Norwich Business School at the University of East Anglia, said: “Supporting Marsh with data analysis on this project has provided real insight for our MBA students studying strategic risk management. The startling issues around the potential growth and value in mesothelioma claims have provided a real and vital case for them to study.”

Marsh’s White Paper, Mesothelioma Claims, includes commentary from Senior Master Whitaker, Richard Mattick, of Counsel with the London office of law firm Covington & Burling LLP, and a case study of Polestar Group, one of the UK’s largest printers of magazines and newspaper supplements. To obtain a copy, please contact vivian.x.wong@marsh.com or visit: www.marsh.co.uk.

About Marsh

Marsh, the world’s leading insurance broker and risk adviser, has over 23,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with approximately 53,000 employees and annual revenue exceeding $11 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC’s Web Site is www.mmc.com. Marsh’s Web site is www.marsh.com.

About the University of East Anglia

The University of East Anglia was founded in 1963 and directly employs around 3,000 full-time staff, has over 14,000 students and an annual income of some £170m. It is estimated to be responsible for indirect employment of some 3,300 people outside the institution and generates direct and indirect economic impact of around £420m. In the latest Research Assessment Exercise, over 50 per cent of the university’s research activity was deemed to be world leading or internationally excellent with 87% in total being of international standing. Thanks to the university and its Norwich Research Park partners, the city has the fourth greatest concentrations of ‘most highly cited researchers’ in the UK, after London, Oxford and Cambridge.

Key contact: Ian Pelham (US London Market)

ian.pelham@insolutionsworld.com Tel : 011 44 (0)1603 207 648