The Mystery of T&N’s Insurance Coverage Deepens
As work continues in the US and the UK to find a global resolution to the asbestos liabilities of Federal-Mogul/T&N, Ltd., asbestos claimants continue to ask whether T&N, the UK’s former "asbestos giant," was adequately insured. Several Members of Parliament voiced constituents’ concerns in an adjournment debate on 16 January, 2002 at Westminster Hall1. John Battle, MP for Leeds, West, commented: "was Turner and Newall properly insured from the outset? Who were the insurers? Nobody knows… Why are we told that Turner and Newall’s insurance cover is commercially confidential?" Tony Lloyd, MP for Manchester, Central, a former employee of Turner and Newall, criticised the firm saying: "The Government must satisfy themselves as to whether the company was legally insured under the national employers obligation scheme. That is central to the argument, because if it was not, the company should have been prosecuted for that failure, and if it was, that insurance should now kick in." Lloyd’s condemnation extended to the insurance industry itself: "There are huge questions about the irresponsibility of the insurance industry. Insurance, by its nature, is about the taking on of risk, and about making payments when that risk goes wrong. The insurers try to ensure that they take the money at the front end, but attempt to deny liability in all circumstances." Dr. Alan Whitehead, the Parliamentary Under-Secretary of State for Transport, Local Government and the Regions, assured the Chamber of the Government’s interest: "I know that legal specialists are working hard to resolve the insurance position."
In an attempt to clarify T&N’s insurance history, researcher Laurie Kazan-Allen scheduled an appointment with Simon Freakley, head of the UK team of court-appointed administrators. Freakley explained that as an administrator his job is to maximise the funds available to T&N’s UK creditors; asbestos victims are an important subset of this group. Neil Griffiths, a lawyer representing the administrators, was also present at the 16 January meeting to ensure that no comprising disclosures were made about the company’s insurers. Griffiths warned that publicity over complex insurance issues could provide loopholes through which insurers might seek to escape their liabilities thus diminishing the available assets. According to Griffiths, the administrators have been researching the tangled insurance web for T&N and its subsidiaries; they are now collating and analysing the evidence obtained in order to comply with a court order which set a 23 February deadline for the submission of a report on T&N’s insurance position. It is not clear whether the report will be made public at that time. Enquiries with solicitors about the usual practice in such situations have been inconclusive. One asbestos specialist said that in his experience marking such a report as confidential or commercially sensitive was unknown. In the light of recent experience however, it might be naïve to assume that by 24 February, public knowledge on these issues will be any greater.
In 1996, an unpublished manuscript entitled: T&N plc: Asbestos-Related Liabilities in the UK and the US was written by Laurie Kazan-Allen. During her research for Chapter 8: T&N plc: Insurance Coverage, she located a copy of a corporate memo detailing the minutes from the Turner and Newall Board Meeting on 10 February, 1977. This document revealed that from 1972-1977, the Royal Insurance Company Ltd. had issued the company’s Employer’s Liability cover. During November, 2001, this memo was widely distributed to UK solicitors, victim support groups, MPs and the press by Ms. Kazan-Allen. At a 18 January, 2002 public asbestos rally in Clydebank, Scotland, Solicitor Frank Maguire exhibited this memo and demanded that the insurance company "honour its obligations" to former shipyard employees who are now suffering from asbestos-related diseases. A statement by the Royal and SunAlliance Insurance Group plc (RSA), which absorbed Royal Insurance, confirmed that an internal investigation was underway into these "complex and serious" allegations and that an "an appropriate statement" would be made in due course. Anxiety among investors led to a 3% fall in the value of RSA’s stock on 17 January, 2002. AM Best, a debt rating agency, downgraded the insurer saying the outlook was negative. The company criticised the downgrade saying it was made "without inside" knowledge. Analysts predict that RSA’s asbestos liability reserves could rise from $317 million to $600 million, after the company completes its review.
January 20, 2002
1 This excellent debate, secured by Michael Clapham, MP for Barnsley, West and Penistone, covered a range of pertinent issues including current UK levels of asbestos-related disease, difficulties in claiming benefits, problems arising from "dual diagnosis" and the appalling decision by the Court of Appeal in the Fairchild case. The text of the debate can be viewed at:http://www.parliament.the-stationery-office.co.uk/pa/cm/cmhansrd.htm