Asbestos-Related Illness s2

Post Magazine & Insurance Times 29 April 2010 Editions

Prepared by

Eleanor Mole Bid assistant, BLM London [email protected]

Post Magazine

News Political parties respond to UKRC challenge over Rehab policies Chartis CEO scans Europe for possible HQ location Two aggregators relist Quinn as ban is relaxed Insurer trio ordered to pay up to £20m over faulty sofas Tesco to use Fortis expertise Co-op chief hits out over asbestos Half of insurers unsure over MoJ RTA reform Questgates appoints two

Feature articles Comment: Deafness claims – Have you heard? Noise-induced hearing loss claim volumes show no sign of abating following a recent precedent. David Pugh explains how Lord Justice Jackson's proposals could at least stem the costs.

Comment: MoJ rules and rehab – In at the start The introduction of new rules for low-value personal injury claims should see rehabilitation take a more central role in the claims process, argues Wilson Carswell (medical director at Moving Minds Psychological Management and Rehabilitation).

Comment: MoJ loopholes – An accident waiting to happen Simon Gibbs examines the new rules governing road traffic accident claims and spots a number of flaws.

Fire-engineered building solutions: A design for life Fire engineering methodology has allowed increasingly creative architecture. Post Magazine looks at the concerns it holds for insurers and the need for them to be involved earlier in the process.

Fire regulations: The future for fire Peter Barker (senior consultant at Chiltern International Fire) explains how the new fire safety rules may impact insurers, and argues the case for a nationally recognised quality scheme for fire risk assessors.

Credit hire: Vehicle overlapping – Seeing double It has been claimed overlapping during vehicle hire could be costing the insurance industry millions of pounds. Post Magazine investigates the how much of an issue this really is.

1 Insurance Times

News ‘Check your cover’ warning over environment directive

Feature articles People & Opinion: Peter Burrows As his four decades in insurance draws to a close, Brit’s chief executive reflects on how things have changed through the years and his more recent success in pushing the insurer to new heights. We meet the man who takes it one step at a time.

Market & Risks: A right pickle They may be easy on the eye and stand out from dull skylines, but iconic buildings give insurers major headaches. Take the Gherkin in the City of London for starters. All that bespoke glass – and that’s before the risk of terrorism. We investigate why each needs its own tailormade policy.

Political parties respond to UKRC challenge over Rehab policies

The three major political parties have responded to the UK Rehabilitation Council's challenge to provide a pre-election policy on reducing the cost of sickness absence.

Labour has vowed to increase spending on its rehabilitation programme, while the Conservative party promised to involve the private and voluntary sector in helping people back to work.

The responses come after letters were issued earlier this month, challenging each party on its idea of reducing the UK's £12bn sickness absence costs.

Responding on behalf of the Conservative Party, Lord Hunt of Wirral said: "Our work programme will offer people targets and personalised help sooner, through private and voluntary sector providers, who will receive payment by results for getting people into sustainable work."

Lord Hunt added that the Conservatives' commitment to the issue had been demonstrated by his front-bench involvement in amending the Compensation Act, allowing an offer of rehabilitation to be made without any liability consequences.

A Labour spokesman said the government remained committed to improving sickness absence costs, having recently abolished the old-style incapacity benefit scheme.

The spokesman added that Labour is committed to increasing funding for the access to work scheme, designed to aid workers with a disability: "We will increase funding to £138m by 2012/2014 for the access to work programme, which the Conservatives are committed to scrapping, so that we can better help more people prepare for, and return to work."

The Liberal Democrats pledged to extend the right to flexible work and increase funding to combat mental health problems. The party responded: "We will encourage a more flexible approach to work by extending the right to request flexible working to all employees, not just parents and carers."

The Lib Dems also promised to increase the percentage of disabled workers in government departments.

Chartis CEO scans Europe for possible HQ location

Lex Baugh, president and chief executive of Chartis Europe Holdings, has refused to rule out any insurance centre on the continent as a possible headquarters for the newly established group. 2 Mr Baugh, who is understood to favour the UK because of its tough regulatory environment, explained the insurer was currently exploring "all options", including following others to Ireland and Switzerland. Chartis Europe Holdings was created in preparation for Solvency II and encompasses Chartis UK, Chartis Europe and Chartis Insurance.

Chartis UK's profit before tax last year was £83m, down from 2008's result (excluding restructure) of £324.3m. The insurer's combined operating ratio deteriorated from 91.7% before restructure, to 105.8%, with the insurer attributing the sharp decline to an increase in losses and expenses.

The business wrote gross premiums of £2.17bn, a decrease of 5% compared with 2008.

Chartis accepted £61m less accident & health business in 2009, which Mr Baugh attributed to the loss of partner Insure & Go — which he conceded would take "a few years" to replace.

The group cited market overcapacity, a weak economy, problems with US parent AIG, and the softening market, as the main cause of its problems in 2009.

Mr Baugh said that despite not predicting a wholesale increase in rates for 2010, the insurer began to re-evaluate its own prices in 2009: "We continue to re-underwrite our portfolio, and ensure we are not being too price-competitive, and this will continue in 2010.

"The sharpness of the economic downturn has exposed loss vulnerability of a number of classes we write, and we have re-evaluated the base rate, and taken corrective actions in 2009."

Commenting on other market developments, Mr Baugh added Chartis "welcomed" Aviva's "interestingly timed" decision to enter the corporate risks market; a move that would not change the approach of the insurer.

In March, James Shea, formerly regional president for Chartis Central Europe & Commonwealth of Independent States succeeded Mr Baugh as MD of Chartis UK.

Two aggregators relist Quinn as ban is relaxed

Confused and Compare the Market have allowed Quinn back onto their panels after the Financial Regulator gave Quinn Group the green light to write motor insurance cover for provisional driving licence holders in the UK.

The aggregators, along with Go Compare and Money Supermarket, removed Quinn Insurance from their websites when the company first entered provisional administration.

Peter Ablett, commercial director at Confused, said: "Quinn specialised in learner drivers before it had to stop accepting new business and is now back in the game. With prices rising, it is a welcome player.

"It remains to be seen if it can continue to offer the competitive prices it had in the past. We welcome Quinn back onto our panel."

Jeremy Moll, Compare the Market commercial director, added: "This will provide our customers with wider choice and hopefully we will see a broadening of the Quinn footprint in the near future."

Go Compare and Money Supermarket confirmed they were reviewing their stances.

Following the news that the partial reopening of the UK business arm would result in redundancies, a spokeswoman for Quinn said that it remained unclear how many people or offices would be impacted and what criteria would be considered.

In a statement, the Financial Regulator said the submission of detailed business plans and proposals is being dealt with by the administrators Grant Thornton. 3 It added: "The initial focus of the administrators was to focus on the UK motor market in its plans to the Financial Regulator. Once further detailed information is provided, the Financial Regulator will examine the directions on the Quinn UK business with a view to reopening certain profitable business lines on a phased basis, in consultation with the Financial Services Authority."

Grant Thornton said it aims to assess the impact on the business and particularly the staffing levels by 30 April.

Quinn Insurance Employees — who might be affected

Dublin 105 staff — predominantly claims Cavan 785 staff — across all functions — claims, private lines, commercial, finance, IT Navan 193 staff — claims, commercial, admin Ennis Killen 563 staff — private lines, call centre Manchester/London 107 staff across both offices — mostly claims and commercial

Insurer trio ordered to pay up to £20m over faulty sofas

Axa, Chartis and Travelers will pay a share of up to £20m in compensation to thousands of consumers who received serious chemical burns from sofas manufactured in China.

The trio, which insured furniture retailers Argos, Homebase and Walmsley's, admitted liability and agreed to pay compensation at the High Court on Monday.

Some 1650 people suffered injury through exposure to the chemical Dimethyl Fumarate in leather sofas manufactured by Chinese companies Linkwise and Eurosofa.

In what is thought to be the largest group litigation in UK legal history, victims have been awarded payouts worth between £1175 and £9000 depending on the severity of their symptoms.

Richard Langton, senior litigation partner at Russell Jones & Walker and solicitor for the claimants, told Post: "This case has been a rollercoaster ride but it goes to show that if consumers are injured there is a way in which they can get compensated. There is certainly a lot of potential for similar cases to be brought in the future."

Last week, the High Court ruled Zurich would not have to compensate around 350 customers who suffered similar injuries from sofas bought at dissolved retailer Land of Leather after it breached its insurance policy by using sofas manufactured by Linkwise.

Tesco to use Fortis expertise

Fortis and Tesco Bank have unveiled the structure of their general insurance partnership. The new insurance company, Tesco Underwriting, subject to regulatory approval, will provide technical underwriting and claims management for Tesco Bank’s 1.5 million motor and home insurance customers and will start managing new customers and renewals by the end of the year. Geoff Carter, has been appointed as CEO of Tesco Underwriting. He has been managing director of Fortis Insurance Solutions since 2007 and will take up the new role on 1 May 2010.

Co-op chief hits out over asbestos

The head of general insurance at Co-operative Financial Services has accused the industry of shirking its responsibility by continuing to oppose the formation of a pool for asbestos-related employers' liability insurance claims.

David Neave has called for victims of asbestosis to be compensated and for insurers not to walk away from their duty to pay out.

4 However, Mr Neave insisted he was not calling for an Employers' Liability Insurers' Bureau in the mould of the Motor Insurers' Bureau as it should not be viewed as an EL insurer "of last resort".

He added: "We need a facility specifically to help those who have historically been exposed to asbestos, so over time, it would dwindle to nothing."

In March, the Association of British Insurers and the MIB jointly proposed the formation of an Employers' Liability Tracing Office, and the creation of a £2m database to track past policies.

Mr Neave said: "We accept there will be cases where it will not be possible to trace an historic insurer, which is why the tracing office does not take it far enough.

"On the balance of probabilities, if an individual has been injured through asbestos in the workplace, you have to assume an insurance policy would have been in place, considering that EL cover has been compulsory for several years.

"Therefore, we can only conclude the insurance industry has had the premium and is seeking to walk away from its obligations, which in any circumstance would be morally wrong, but for somebody who is terminally ill, it is a significantly different issue."

Mr Neave's position on insurers' responsibility for untraceable EL policies puts him at odds with the ABI, which has so far opposed any industry-funded pool).

An ABI spokesman confirmed to Post its continued opposition to the idea.

Mr Neave, a former chairman of the ABI's anti-fraud committee, was appointed chairman of the Insurance Fraud Bureau in November, which joined forces with the MIB in March.

Half of insurers unsure over MoJ RTA reform

Almost half of insurance firms remain unconvinced by the Ministry of Justice road traffic accident claims reform, according to new research.

Law firm Berrymans Lace Mawer found 45% of respondents are unsure about the impact of the reforms, which come into force tomorrow (30 April), while 2% believe the changes will have a negative impact. In addition, three in five respondents admitted they were not ready for the changes and less than a third are confident about using a web portal to deliver the process.

However, despite the uncertainty surrounding the reforms, almost two thirds claimed the process would speed up compensation to claimants.

BLM partner Kerris Dale told Post: "We are optimistic on how this will roll forward, although it remains to be seen in practice. The web portal has only recently become available and that may be one reason for the continuing uncertainty."

Questgates appoints two

Questgates has strengthened its counter-fraud team with the appointment of Sally Maeers and Mark Woodhead.

It follows the hiring of John Freeman who joined the business as counter fraud director, together with a number of colleagues from Capita.

Ms Maeers has previously been a trainer with the NHS counter-fraud and security management team. She will support the existing training team, which provides specialised practitioner-based accredited fraud training through Questgates' partnership with the Fraud and Financial Crime Centre at Teesside University.

Mr Woodhead joins the field based team as an investigator from Royal Bank Of Scotland where he worked for several years in its claims validation unit. 5 ‘Check your cover’ warning over environment directive

A water supplier that polluted a river, killing 6,000 fish, has become the first UK company to fall foul of new European environmental laws.

United Utilities will have to submit costly plans to the Environment Agency showing how it will remedy the damage it caused at Three Pools Waterway, Southport, Merseyside, in July last year.

The Environmental Liability Directive was passed by the European Commission 13 months ago. It gives powers to the Environment Agency to order polluting firms to provide a remedy for contamination.

The directive has become a focus for insurers. They stress that policyholders will need revised insurance to ensure they are covered.

The government estimated there would be 300 cases a year that would fall under the directive. However, XL Insurance environmental manager Simon White believes the United Utilities case would be the first of many. He warned the industry not to let its guard down.

White said: “When you are talking about something as complex as the environmental legal framework that exists in the UK, it is not a simple task of the regulator saying, ‘now we are going to prosecute everything that comes under the directive’. It is going to take time.”

White also warned of a ballooning overall cost for companies that breach environmental regulations. “Companies are facing more and more costs, and so environmental insurance is needed now more than ever to help cover that exposure,” he said.

United Utilities was fined £14,000 earlier this month for polluting Three Pools Waterway. The court heard that machinery failed at a pumping station, and sewage seeped into the river over three days. Dead fish included roach, bream, tench, pike and perch of all sizes and ages. It is estimated that the river will take seven to ten years to recover.

The company said it was not alerted until the third day of the incident, and its reaction was immediate. It has since replaced the pumping station’s computer and alarms, and staff have been retrained.

The Environment Agency said: “This was a major incident that had a devastating impact on the fish. United Utilities owns and operates the sewer network and is responsible for resolving any problems with this system.

“This incident caused significant damage to the environment. This could have been avoided or considerably reduced if the company had correctly reset a pump when it responded to an alarm.”

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Birmingham Bristol Cardiff T 0121 643 8777 T 0117 975 8649 T 02920 447 667 F 0121 643 4909 F 0117 905 8810 F 02920 489 041

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