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13th June 2014

Government ‘behind closed doors’ deal with insurers comes to light

A ‘behind closed doors’ deal struck between the Government and the Association of British Insurers (ABI) to agree legal reforms for the benefit insurers has been brought to light. Incredibly the deal saw the government acquiesce to the multimillion pound insurance industry by deciding to impose legal costs on mesothelioma sufferers.

Leading law firm Thompsons Solicitors has long campaigned alongside asbestos and other victims' support groups for greater transparency about the relationship between the ABI and the current Government.

When The Legal Aid, Sentencing & Punishment of Offenders Act (LASPO) was introduced on 1 April 2013, Parliament exempted mesothelioma claims from the Act's requirement that claimants pay legal costs and mandated Government to conduct a review and publish a report on the likely effect of LASPO on mesothelioma claimants.

In December 2013, The Ministry of Justice announced its decision to remove the LASPO exemption from mesothelioma claims, and in March 2014 published a report containing a cost benefit analysis seeking to justify that decision. In response the Justice Select Committee set up an inquiry.

Significant financial savings for insurance

At a Justice Select Committee evidence session on Tuesday, 13 May Ian McFall, National Head of Asbestos Litigation at Thompsons, stated his belief that a deal had been done between Government and the insurance industry designed to fund the Mesothelioma Act 2014 while delivering substantial, long-term savings to the insurance industry.

McFall told the Committee the proposals were “presented as measures that would speed up the compensation claims process, but the real agenda and the actual outcome …[was] significant financial savings to the insurance industry through reducing the transaction costs of mesothelioma claims.”

Asked by Labour MP John McDonnell whether he thought the deal between Government and the insurance industry included lifting the LASPO exemption in return for funding the Mesothelioma Act, McFall replied: “Others will form their own conclusions, but that is precisely how I see it.”

James Dalton, Head of Motor and Liability at the ABI, evaded giving a direct answer when repeatedly pressed by John McDonnell MP to comment on whether a deal with Government included removing the LASPO exemption, leading McDonnell to state: “I think we’ll take that as a yes.”

Deal flies in the face of open government

Following the existence and terms of the agreement coming to light, Ian McFall said:

“This confirms in writing what we suspected; the ABI and Government colluded on reforms to benefit the insurance industry and to the detriment of mesothelioma claimants.

“The most significant part of the deal to achieve savings for insurers was making dying mesothelioma sufferers pay legal costs.

“The existence of this deal between the Government and the ABI flies in the face of open government and raises serious questions about whether other such agreements are out there.”

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