INSURERS last night warned they may run out of cash for compensation after a landmark court ruling exposed them to thousands of new asbestos claims.
The multibillion-pound industry claimed funds set aside by now-dormant firms could be wiped out by an expected wave of legal actions lodged against long-gone shipyards and factories.
The UK Supreme Court yesterday threw out a legal bid by major insurance firms to strike down a Holyrood law giving Scots with lungs scarred by asbestos the right to sue.
Its decision means at least 1350 actions for damages will now go ahead -- and is widely expected to spark thousands more claims from workers with the scars or “pleural plaques”.
A spokeswoman for the Association of British Insurers (ABI), which believes those with the symptomless plaques do not deserve payouts, said: “This decision is going to deplete funds that are available for compensating genuine victims of negligent exposure to asbestos, such as those suffering from asbestos-related lung cancer.”
Industry leaders fear so-called run-off insurers -- companies that are no longer writing new policies but have set aside “finite pots” of cash for payouts -- could simply run out of funds.
Andrew Smith, QC, a personal injury lawyer who regularly acts for both claimants and insurers, echoed the concerns.
A long-standing critic of the Scottish Parliament law on pleural plaques, Mr Smith said: “We could be in the situation that there is no money to pay the people who are really sick because we have paid out to those who are not.”
Neither the ABI nor campaigners for pleural plaque compensation know how many more people will make claims. The Scottish Parliament’s own experts calculated in 2009 that outstanding claims could be worth up to £22 million. Figures from Westminister suggested UK-wide potential exposure of £8.6 billion.
The ABI called on the Scottish Government and courts to look at the potential danger of “compensation tourism”, when claimants from England and Wales who may have spent some time north of the Border sued in a Scottish court.
A campaigner for pleural plaques victims across the north of England yesterday said he believed there could be thousands of sufferers south of the Border who may do so.
Kevin Rowan, of the TUC Northern Asbestos Support and Campaign Group, said over the past 30 years about 30,000 people, or an average of 1000 a year, are known to have died from asbestos-related illnesses in the region.
He said: “A lot of potential claimants would have gone to ground because they thought they had no chance, and clearly that has changed. You are talking about thousands of people.”
However, the main firm of solicitors acting for Scottish claimants cast doubts on the prospect of such “compensation tourism”. Thompsons Solicitors, which handles some nine out of 10 cases, said compensation could only be granted for the time an English-based worker with pleural plaques was in Scotland.
Mr Smith believes the door, however, is open for many claimants from outside Scotland, even if they only spent a day working north of the Border.
Patrick McGuire, of Thompsons, said the court ruling was a “victory for justice and democracy over insurers’ greed and self-interest”.
Justice Secretary Kenny MacAskill yesterday said the judgment was “a triumph for the progressive politics that saw parties unite to do the right thing and help those that have developed pleural plaques as a result of negligent exposure to asbestos”.
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