Compensation chaos looms

The government's decision to add a new clause to the Compensation Bill is a knee-jerk reaction to a House of Lords decision (Barker v Corus) that will do far more long-term harm than it will short-term good. While obviously unfair this rests on the foolish notion that insurance companies have bottomless pockets.

Singling out one occupational disease lacks any sense of natural justice. There are many industrial diseases that leave people in pain and blight but the law should not make one of them a special case.

To compound the injustices still further, it transfers a responsibility that should fall on the public purse to the private sector. The amendment that has been put forward, as the new clause three of the Bill, looks as if it will make insurers pay for compensating people who may have started working with asbestos pre-1972 for an employer who did not take out employers' liability cover when not legally required to do so.

The insurance industry has not covered itself with glory when tracing old policies. This is where the compensation gap starts to yawn wide but the answer is not to load the responsibility for paying the compensation onto those that can be traced, however.

What is needed is a concerted response to this common sense House of Lords decision and only two issues need to resolved.

Firstly, an acceptance that a pooled payment scheme is urgently needed where the government pays for uninsured pre-1972 claims (a diminsihing sum over time), the insurance industry collectively pays for the untraceable post-1972 claims, and insurers individually pay for the proportion claims where they are identifiable. The downside - that the good insurers will pick up some of the tab for the bad - was going to happen anyway but a well managed, pooled arrangement would be a fairer arrangement.

Secondly, the scope of industrial diseases that are eligible needs to be established so that we are not back in Parliament in a few years time looking at other ailments.

Acknowledging that the destination is full and prompt compensation of the victims, the government and industry should cover the compensation gap on a 50/50 basis until a permanent scheme is put in place.