Insurers have an equitable right of recoupment where they supply cover for only part of the period of asbestos exposure, the Supreme Court has ruled.
According to Keoghs, which acted for interveners the Association of British Insurers in the case, the judgment in International Energy Group (IEG) v Zurich [2015] UKSC 33 means that in mesothelioma claims where insurance does not cover the whole period of asbestos exposure, insurers can seek a contribution from solvent policyholders. Where the policyholder is insolvent, insurers will pay the whole claim. The claimants will always get full compensation.
Guernsey energy firm IEG’s predecessor employed Alan Carré for more than 27 years until 1988 and exposed him to asbestos dust. Zurich provided employers’ liability insurance for six of the 27 years of asbestos dust exposure.
Mr Carré subsequently died of mesothelioma. In 2008, he brought a claim against IEG, which was settled later that year by a £250,000 compensation payout plus £15,300 in costs. IEG also incurred defence costs of £13,151.60, and sought to recover all their outlay from Zurich on the basis that a material contribution to the risk of disease is enough to satisfy the legal test of causation. Zurich agreed but argued that the law of equity should give them a right of recoupment.
The Justices held that the intention of the insurer in the policy was to provide cover for the whole mesothelioma, and a majority of the court held that equity gave the insurer a right of contribution against co-insurers.
Joshua Munro, of Hailsham Chambers, who acted for IEG, writing this week for NLJ, says: “There is no doubt that this is a stunning result for insurers.
“A brand new equitable right of recoupment from an insurer to its insured has been established. Even though this is presently restricted only in respect of mesothelioma claims, for the first time English law has recognised an equitable right of an insurer to compensation from its own insured in respect of the claim on the policy.”
Insurance specialist Nicholas Bevan says: “This is very reassuring news for claimants. It means that provided one insurer can be traced who was on risk for a single year of significant exposure, he or she will be assured of recovering their full compensatory entitlement; leaving it to the insurers to sort out the often very tricky arguments over proportionality.”
