Web alert: Important Supreme Court mesothelioma decision for insurers and members

The Supreme Court recently handed down judgment in the case of Zurich Insurance v International Energy Group [2015] UKSC 33. 

The Supreme Court was asked to rule on the extent of the insurer's liability.

The Supreme Court ruled that under an employers’ liability policy, an insurer paying a mesothelioma claim where the insurer was on risk only for part of the exposure period would be able to recover from any other insurer – or from the insured, if no cover existed or could be traced – a contribution to the settlement paid to the former employee.

The ruling in Zurich Insurance v International Energy Group means that an insurer retains the right to obtain contributions from other existing insurers who provided cover to the employer. It also confirms that a guilty employer or its insurer can seek contributions from other guilty employers or their insurers which allows the employer sued, or its insurer, to be reimbursed for part of the damages it has paid out, this reducing the overall outlay of the employer or its insurer.

Victims remain entitled to 100% of their compensation and can recover in full from the insurer of a guilty employer, but the insurer can seek to recover, from other insurers or a solvent employer with an uninsured period, on a pro rata basis relative to periods on risk.

However, it remains the case that under an employers’ liability policy, an insurer paying a mesothelioma claim where no other cover can be traced and no employer exists will still be liable to pay the claimant the full amount of their compensation and will not be able to reduce the amount of compensation they pay.

The ruling provides clarity to members and the club on the issues of apportionment of damages and contributions and endorses the practical approach insurers have adopted of apportioning damages between themselves on a time on risk basis where possible.

Further case details and the full judgment can be found here.

For further information please contact Richard Stevens (richard.stevens@ctplc.com) or Michael Hughes (michael.hughes@ctplc.com)