Mesothelioma and the Insurance Trigger: Date of Injury - Employers' Liability Policy Trigger Litigation

Durham v. BAI [2010]

This litigation concerned claims brought against insured employers by sufferers of mesothelioma, an incurable form of lung cancer caused by prolonged exposure to asbestos. A notable characteristic of the disease is that it can take many decades for it to develop after the original exposure to asbestos, and in some cases it might only be diagnosed by way of postmortem. In the past, the medical evidence suggested that malignant changes associated with the disease typically occurred about 10 years before the onset of symptoms, although more recently this has been revised by many experts to five years. At any rate, once the disease is identified the prognosis is poor. Most sufferers die within about 18 months of diagnosis. The condition is a major issue for the employers' liability insurance market, as current projections forecast a peak in the number of mesothelioma sufferers in the next 20 years.

Traditionally, EL insurers in the UK have as a matter of practice adopted the "exposure" principle in determining cover for mesothelioma claims. In other words, the responsive EL policy will be that in place at the time when the claimant was exposed to asbestos, rather than that prevailing at the time of onset of the symptoms, or diagnosis of the condition. Where, as is common, exposure spanned a number of policy years (perhaps an entire working life) liability would be shared between the various insurance interests pro rata to their time on risk.

That practice was thrown into doubt by the decision of the Court of Appeal in Bolton Metropolitan Borough Council v Municipal Mutual Insurance [2006]1. Importantly, the Bolton case was concerned with public liability, not employers' liability insurance. Under the terms of the relevant policy in Bolton, the insurer agreed to indemnify the insured in the event that it became liable for injury or illness which occurred "during the currency of the policy". The court held that the injury to mesothelioma sufferers occurred not when they were exposed to asbestos but much later, at the point when they became fatally ill, which typically was thought at the time to be about 10 years before exhibiting outward symptoms.

The Bolton decision caused many EL insurers to look again at their approach to settlement, as it appeared that they might not be liable to indemnify on a time exposed basis after all. Accordingly, the matter went before the Commercial Court in a series of consolidated test cases...