An ELIB for mesothelioma.

Two years since the consultation closed, the Government has announced new measures to ensure that more people are compensated for occupational mesothelioma. Essentially the problem is that the latency of this disease is so long that records of insurances are often lost by the time the victim realises they could make a claim and the employer long since gone out of business.  As a result, those with potentially good claims for compensation are denied access to justice. The proposed solution is an Employers’  Liability Insurance Bureau (ELIB), providing a mechanism for funding good claims where the insurance policy cannot be traced. Funding would be generated by imposing a levy on current EL insurers.

Evidence from:

DWP (2012) ISBN 978-1-78153-071-9

Accessing compensation – Supporting people who need to trace Employers’ Liability Insurance: Government response to consultation – July 2012

The DWP report makes no attempt to quantify the number of cases involved, but based on various academic papers, this can be estimated. For example, for men, the estimate is that up to 190 cases per year could now be missing out because of an untraced insurance policy.

Given the increased moral hazard where the employer cannot be traced, the lack of factual defences and including female claims a total ELIB case load should be around 300 claims per year. If higher than 340 we would suggest a closer investigation of factors that might be leading to systematic abuse of the ELIB facility.

Moral hazard is to be deterred by providing an incentive to find the relevant lost EL policy, if there was one. ELIB Claimants will be paid a % of the damages they could get by following the usual channels. The % rate was not reported in the DWP response.

There is also a question about new claims being made by relatives of those already dead but who’s claims had been frustrated by lack of traceable insurance. In theory there could be more than a thousand such cases where a strong legal case could have been established before death. Should these cases be re-opened? The Government has concluded that the ELIB will be available only to those newly diagnosed on or after the 25th July 2012.

Diagnosis rates are likely to fall quite quickly after 2017.

We estimate that the total effect of the ELIB scheme should be to add 3% to the average EL premium between now and 2017. This should fall to 1.5% by 2027 (all else being equal).

More details will be provided to Radar subscribers in the next issue of the Radar journal.