Claims for work related illness are on the increase. A number of these illnesses result from injuries sustained in the past, sometimes decades prior to a claim even being considered. Consequently, many claimants are unable to trace an employer or employers’ liability (EL) insurer linked to the injury or disease. In 2010, it was estimated that 3,559 potential claimants were unable to trace their insurers with 537 of those cases relating to mesothelioma claims.

In July 2012 the Financial Services Authority (FSA) published its own consultation entitled "Tracing employers' liability insurers – historical policies" to coincide with the Department of Work and Pensions (DWP) announcement confirming a new support scheme for mesothelioma sufferers.

The FSA considers that the proposals contained within its consultation paper support those announced by the DWP.

The FSA will publish final rules, if approved, in January 2013 for implementation within six months.

Outline of the consultation

The primary proposal of the FSA’s consultation is to require insurance firms who may have actual or potential EL claims to "conduct effective searches of their records when they receive a request from claimants or other third parties regardless of the period to which they relate".

For policies pre-dating 2011, the FSA is proposing that all EL insurance firms take reasonable steps to conduct searches of their records for policies and documents pre-dating 2011. This is against the background that to date, in a case where a policy pre-dates April 2011, a claimant can request a search to be made by the Employers' Liability Tracing Office (ELTO) but the search is not compulsory. As a result a claimant may be unable to bring a claim.

The proposals also set out that firms will need to put in place a written plan for complying with the tracing policy and to "respond to all enquiries within one month unless the request is from a qualifying tracing office and no evidence of a historical policy is found". The FSA’s final proposal relates to what a response should say to the claimant.

Tracing policy

In order for insurance firms to be able to demonstrate compliance with the policy they will need to be able to provide:

  • A list that will identify where their historical EL policies are held or are likely to be held
  • Details of the different types of records to be searched by the firm, such as electronic files, paper files, and microfiche
  • Details of how the firms conduct searches
  • Details of how and in what circumstances the firm may decide not to conduct a search

Firms will be required to describe how they carry out searches, potentially including a summary of different search systems and features used. The policy will also set out why and in what circumstances a firm decides not to carry out a search.

Timing and content of response

The FSA believes that one month is a reasonable period of time in which to require firms to return searches. When the search enquiry has come through a qualifying tracing office (ELTO) and when no evidence of historical policy has been found, the proposed FSA rules do not require a response. When a search is conducted and no historical policies found, the response should set this out clearly and explain that reasonable steps were taken to conduct an effective search.

If the search is carried out through ELTO, ELTO will contact the claimant directly.

The search regime will need to be in place by June 2013. The FSA estimate the cost of setting up this procedure to be in the region of £25,000 per firm. However, it acknowledges that in cases where firms have no current search facility in place the cost could increase up to £150,000.

Timetable

The FSA notes that a number of firms are already undertaking comprehensive searches and possess the infrastructure to implement the proposed requirements quickly. The FSA therefore proposes that firms have in place an effective search regime of their historical EL policies within six months of the policy’s formal implementation date.

APIL has levelled criticism at insurers in relation to their efforts to trace historic policies. The ELTO database has, however, 149 insurance company members and some eight million policies and, in response to the criticism, the ABI has confirmed that tracing rates have improved over 50 per cent so far, with more than 28,000 searches having been undertaken in the year to April 2012. Whilst many insurance firms are already undertaking comprehensive searches, the FSA’s scheme seeks to give the process greater transparency.

There has been some opposition from the industry, concerned at the cost implications, particularly for those insurers whose infrastructure would need considerable upgrading. The insurance industry has called for claimant representatives to work with them to improve outcomes for asbestos victims by joining with the ELTO board. Whether or not this FSA policy is implemented, it is likely that increased cooperation amongst those involved in these claims will have the greatest impact on results.

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