Landmark Supreme Court judgment on Zurich v IEG

Judgment on mesothelioma coverage claim offers clarity for insurers and claimants

The landmark ruling handed down by the Supreme Court today in the case of Zurich Insurance PLC v International Energy Group Limited (IEGL) in which DWF represented Zurich in their successful appeal, will offer clarity to employers’ liability insurers and their insureds, as well as to claimants seeking compensation for long-standing industrial disease claims such as mesothelioma.

The Supreme Court judgment sets a precedent and is a defining moment for all insurers on the levels of indemnity which they need to pay towards a claimant’s damages and costs when a mesothelioma claim is settled.  The ruling by seven Justices will also impact all mesothelioma claims as it adds clarification on ‘causation’ of the exposure to asbestos-related diseases within an insurance period.

DWF partner and head of occupational health and casualty Derek Adamson, who represented Zurich Insurance PLC in this highly significant case, is a leading expert on the developing law around mesothelioma claims and insurance coverage in particular, the aim of which is not only to ensure that victims and their families are given fair compensation, but that its cost is fairly shared between compensators. 

Responding to the Supreme Court judgment, Adamson said: “I am delighted that DWF has been able to win this judgment on behalf of our client Zurich after a lengthy legal process. It is one of the most complex and sensitive cases I and my team have ever worked on. This ruling has confirmed our understanding of the Trigger judgment, that as a matter of principle, at common law, there has been no altering of the Fairchild ‘quantum rule’ as developed in the Barker case. Further, we are pleased that the Supreme Court by a majority has agreed our approach to equitable recoupment, thus ensuring that, in accordance with the public policy evident in the 2006 Act, victims will recover full compensation. This clarification to the way mesothelioma claims are settled will provide welcome certainty which should benefit claimants, insurers and their policyholders alike.”

Today’s ruling means that under an employers’ liability policy, an insurer paying a mesothelioma claim where the insurer was on risk only for part of the exposure period would be able to recover from any other insurer, or from the insured if no such cover existed or could be traced, a contribution to the settlement paid to the former employee proportionate to the relative periods on risk.

The judgment also introduces the concept that an insurer covering part of the period of exposure to asbestos, who by reason of the Compensation Act 2006 will meet the claim in full, has an equitable recoupment right to seek contributions from other insurers in respect of their period on risk and also from the insured in respect of uninsured periods. This new equitable right gives both effect and legal authority to the practice that has been adopted by the insurance market and policyholders under informal arrangements for many years.

Derek Adamson

Partner - Head of Occupational Health and Casualty

I am a leading insurance lawyer involved in cutting edge litigation. My expertise is in policy interpretation arising from mesothelioma claims, environmental litigation, product liability and construction cases, including a wide experience of group litigation cases.