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Insurers on coverage when asbestos exposure occurs pay mesothelioma claims: U.K. court

Insurers on coverage when asbestos exposure occurs pay mesothelioma claims: U.K. court

LONDON—The U.K. Supreme Court on Wednesday rejected an appeal by four insurance companies to limit their liability in cases concerning asbestos exposure and mesothelioma.

On a 4-1 vote, the court of final appeal in civil cases in the United Kingdom said the insurers, which include London-based Municipal Mutual Insurance Co. Ltd., are liable for claims by workers suffering from mesothelioma, which is a lung cancer that can take decades to develop after exposure to asbestos.

The insurers had argued that the insurer on the coverage when the mesothelioma develops, rather than when the claimant was exposed to asbestos, should pay the claim. The justices rejected the argument, ruling that the coverage was triggered when employees were exposed to asbestos dust, not when symptoms of mesothelioma emerged.

“Most employers' liability cases involve ‘short-tail' claims: typically, an accident involving injury. It is not surprising if the language of the insurances fits more easily with situations in which cause and effect coincide in time,” the U.K. Supreme Court ruled. “But, by the same token, this does not mean that the underlying risk being assumed was in either party's mind limited to circumstances in which a cause gave rise to an effect during one and the same insurance period.”

Citing the U.K. Employers Liability Compulsory Insurance Act 1969, the court said the law “requires insurance on a causation basis.”

London-based Zurich Insurance P.L.C., whose Zurich Insurance Co. was a respondent in the case, welcomed the causation-based ruling.

“Zurich is pleased that mesothelioma claimants now have the clarity they need,” Zurich U.K. General Insurance CEO Stephen Lewis said in a statement. “This Supreme Court judgment reinforces the point that polices we thought we were selling and what people thought they were buying are now to be upheld as such.”

Nick Starling, director of general insurance and health for the London-based Assn. of British Insurers, also welcomed the ruling.

The U.K. Supreme Court ruling “confirmed what most in the industry have always understood—that the insurer on cover when the claimant was exposed to asbestos should pay the claim, rather than the insurer on cover when the mesothelioma develops,” Mr. Starling said in a statement. “This case has been pursued by a small group of runoff insurers acting independently and at odds with the views of the majority of the U.K. insurance industry.”