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ABI SUBMISSION TO THE SCOTTISH PARLIAMENT’S FINANCE COMMITEE ON
THE DAMAGES (ASBESTOS-RELATED CONDITIONS) (SCOTLAND) BILL
The Association of British Insurers (ABI) represents the collective interests of the
UK’s insurance industry. The ABI speaks on issues of common interest; helps to
inform and participate in debates on public policy issues; and also acts as an
advocate for high standards of customer service in the insurance industry.
EXECUTIVE SUMMARY
The Scottish Government has committed to introducing legislation to make
symptomless pleural plaques and other symptomless asbestos-related conditions
compensatable.
The insurance industry is fundamentally opposed to the proposed legislation, which
we believe:

does nothing to ease the anxiety of people with pleural plaques – rather than
legislate, the Scottish Government should provide reassurance by improving
understand among the wider public as well as those diagnosed with the
condition.

will lead to a renewed surge in the practice of scan vans seeking to identify
cases in order to obtain a referral fee, causing unnecessary distress to people
who will go on to believe mistakenly that they will develop a terminal cancer.
Scans also carry their own risks to health.

will impose significant unjustified costs on businesses, consumers and
taxpayers.

will make Scotland a less attractive place to do business – businesses require
assurance that the Government is committed to a stable legal environment;
investment and wealth-creating activity will be discouraged if businesses
perceive undue readiness on the part of Scottish Government and legislative
authorities to change the law.

contravenes Article 1 and Article 6 of the European Convention on Human
Rights.
We believe that the Scottish Government has significantly underestimated the
potential cost of the legislation. Using UK Government figures, we estimate the cost
of making plaques compensatable in Scotland is likely to be between £1.1bn and
£8.6bn1.
INTRODUCTION
In the vast majority of cases, pleural plaques are symptomless. Compensating for
the condition sends the wrong message to people with plaques that it is more
serious than it is, causing unnecessary anxiety.
In February, the Scottish Government consulted on its partial regulatory impact
assessment of the proposed Bill. We welcomed this consultation as opportunity for
1
Ministry of Justice, Pleural Plaques, 9 July 2008
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the Scottish Government to consider afresh the advantages and disadvantages of
legislative action.
More than three-quarters of the responses to that consultation opposed the Bill. We
are concerned, however, that the issues raised in those responses have not been
properly considered.
Firstly, we believe that compensating someone with pleural plaques will only
perpetuate any anxiety they might feel about the diagnosis; education, not
legislation, is the best way to reassure a person that pleural plaques does not mean
that they are going to develop mesothelioma or any other symptomatic asbestosrelated condition.
Secondly, the Bill will undermine business confidence in the extent to which they can
rely on a stable legal framework in Scotland, and will affect the competitiveness of
Scottish businesses compared to their counterparts in the rest of the UK.
Thirdly, the Bill contains retrospective provisions which contravene Articles 1 and 6
of the European Convention on Human rights, which precludes any interference by
the legislature with the administration of justice designed to influence the
determination of the dispute.
We are concerned that the Scottish Government has significantly underestimated the
financial implications of the proposed legislation. This is because it has
underestimated the number of cases of pleural plaques and the number of claims:
 there is evidence that between one-third and one-half of workers
occupationally-exposed to asbestos develop pleural plaques2
 the RIA does not take into account the fall in the number of pleural
plaques claims following the Court of Appeal judgment
 it gives no consideration to the wider implications of changing the law
of delict.
The financial costs would fall on defendants, including insurers and local authorities,
and would be passed onto policyholders and taxpayers in the form of higher
premiums and council tax.
We urge the Financial Committee to highlight to Parliament the issues associated
with this Bill.
1. Did you take part in the consultation exercise for the Bill, if applicable, and
if so did you comment on the financial assumptions made?
The Association of British Insurers did respond to the consultation on the partial
Regulatory Impact Assessment; additionally, seven of our members submitted
separate responses. All seven responses raised concerns about the adequacy of
the financial assumptions made. Specifically:
2
3 Dec 2007 House of Commons debate, Michael Clapham (Lab): reading an email from Professor
Tony Newman Taylor: "You may be interested to know that about a third to one half of those
occupationally exposed to asbestos will have calcified pleural plaques thirty years after first exposure.
After twenty years, 5 to 15 per cent. will have uncalcified pleural plaques".
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

The number of pleural plaques claims has been underestimated
The financial impact of the wider implications of fundamentally changing the law
are overlooked.
2. Do you believe your comments on the financial assumptions have been
accurately reflected in the Financial Memorandum?
We are concerned that while our comments have been noted, they have not been
given sufficient attention.
The Financial Memorandum acknowledges that insurers take the view that the
number of claims is too low, but considers the estimate in the partial RIA to be a
reasonable basis on which to proceed because of the lack of any “firm figures to the
contrary”. Accordingly, the financial implications of the legislation are based on 200
claims being received per year. While we cannot give a precise number of future
claims, in our responses to the partial RIA we pointed to data that could be used to
inform what the range might be. This has not been considered in the Memorandum.
The UK Government has subsequently published a consultation document on pleural
plaques which includes a more thorough assessment of the potential costs of
compensating for the condition. We urge the Financial Committee to consider these
figures rather than those contained in the Memorandum when examining
expenditure from the Scottish Consolidated Fund.
Another concern raised in our response to the partial RIA consultation was that the
proposed legislation fundamentally changes the law of delict, which could pave the
way for any number of claims being made for the risk of an illness occurring, or for
worry that something might happen. If legal developments of this nature occurred,
the level of litigation would significantly increase along with the possibility of weak or
spurious claims, with damaging effects for businesses and the economy.
While the Memorandum notes our concern, it suggests that it is not relevant to this
discussion. We disagree: any financial assessment of the legislation must consider
the cost of its wider implications.
3. Did you have sufficient time to contribute to the consultation exercise?
Yes.
4. If the Bill has any financial implications for your organisation, do you
believe that these have been accurately reflected in the Financial
Memorandum? If not, please provide details.
The Bill has significant financial implications for the insurance industry and other
organisations, including businesses relying on liability insurance.
Firstly, the Financial Memorandum estimates that there will be approximately 200
pleural plaques claims annually. Figures from the Institute of Actuaries 3 show that,
across the UK, approximately 500 pleural plaques claims were made against
3
Institute of Actuaries, presented at the GIRO conference, October 2007 (approximate figures)
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insurers in 1999, by 2005 this had risen steeply to 6,000, only to fall again to 2,250 in
2006 following the Court of Appeal judgment. We estimate that had the test cases
not been brought, the annual number of claims in Scotland would be closer to 1,800
than the 200 the Financial Memorandum suggests.
The underestimation of the number of potential plaques claims prohibits accurate
forecasting of the cost of the legislation. The Financial Memorandum suggests that
the annual cost to employers and insurers of compensating plaques would be
between £5.5m and £6.5m. Given the level of uncertainty around claims numbers,
we can only suggest a range of costs, but estimates based on the UK Government’s
own figures suggest the total annual cost to defendants with liabilities in Scotland
being between £76m and £607m.
5. Are you content that your organisation can meet the financial costs
associated with the Bill? If not, how do you think these costs should be met?
Estimates based on the UK Government’s figures suggest that the costs to
defendants of legislation are likely to be between £1.1bn and £8.6bn in relation to
asymptomatic asbestos-related conditions.
A significant proportion [do we know what proportion?] of those costs would fall on
insurers. Higher costs for insurers would ultimately be passed onto policyholders in
the form of higher employers’ liability and public liability premiums. [insert reference
to total Scottish EL premium income] Potentially, some insurers may choose to exit
the Scottish liability insurance market altogether.
Additional costs are likely to be incurred given the wider implications of the Bill (see 3
above).
6. Does the Financial Memorandum accurately reflect the margins of
uncertainty associated with the estimates and the timescales over which such
costs would be expected to arise?
We are not satisfied that the Memorandum reflects the uncertainty of the estimates
of costs, and underestimates the number of cases of pleural plaques and
consequently the number of claims (see 4 above).
The reasons for the inaccuracy of the Memorandum’s estimate are that it
significantly underestimates the number of cases of pleural plaques and the number
of claims. There are a number of studies which suggest that pleural plaques are
more prevalent than the Memorandum would suggest:
 A study of autopsy results for males over 70 years old near Glasgow
showed a 51.2% incidence of pleural plaques4
 A study by SJ Chapman concludes pleural plaques “are found in as many
as 50% of asbestos-exposed workers”5
 Professor Tony Newman Taylor, previously chair of the Industrial Injuries
Advisory Council, states that about one-third to one-half of those
4
5
Cugell, DW and DW Kamp, "Asbestos and the Pleura: A Review", Chest 2004:125, 1103-1117
Chapman, SJ et al, "Benign Asbestos Pleural Disease", Curr Opin Pulm Med 2003:9(4), 266-271
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occupationally exposed to asbestos will have calcified pleural plaques
thirty years after first exposure”6.
Further, any legislation to make pleural plaques compensatable would likely flush out
claims which would otherwise not have been brought. History shows us this to be
true – at the outset of the British Coal COPD scheme, 150,000 claims were
expected; by the time the scheme closed, 592,000 claims had been registered. This
massive underestimation was despite data with an apparently greater degree of
statistical certainty than exists for plaques.
The Financial Memorandum also fails to adequately deal with the potential for forum
shopping. This creates further uncertainty about the potential number of claims.
7. If the Bill is part of a wider policy initiative, do you believe that these
associated costs are accurately reflected in the Financial Memorandum?
Not applicable.
8. Do you believe that there may be future costs associated with the Bill, for
example, through subordinate legislation or more developed guidance? If so,
is it possible to quantify these costs?
For any damage to be compensatable, it must be more than de minimis which is to
say that it is required to reach a threshold of seriousness if it is too justify the
intervention of the law. Symptomless pleural plaques do not meet this threshold.
Legislating to make plaques compensatable therefore fundamentally changes the
law of delict.
Changing the law in this way for asbestos-related conditions is likely to be used as a
precedent to argue for compensation in other situations. It might lead to calls for
compensation in other circumstances where no actionable damage has yet occurred,
or for the risk of an illness occurring, or for worry that something might happen, for
example, in relation to the effects of passive smoking in the workplace, or exposure
to the sun in jobs involving outdoor work, or for exposure to potentially toxic
substances.
We cannot know what type of new claims might arise under these circumstances, or
how many; it is therefore impossible to quantify the potential costs; however, we can
say that they are likely to be substantial.
6
3 Dec 2007 House of Commons debate, Michael Clapham (Lab): reading an email from Professor
Tony Newman Taylor: "You may be interested to know that about a third to one half of those
occupationally exposed to asbestos will have calcified pleural plaques thirty years after first exposure.
After twenty years, 5 to 15 per cent. will have uncalcified pleural plaques".
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