Liability insurance: social security payments

When the House of Lords decided in Fairchild v Glenhaven Funeral Services Ltd [2002] Lloyd’s Rep Med 361 that an employee who contracted mesothelioma after having been exposed to asbestos by a number of different employers was entitled to sue any one of the employers for the full amount of the loss, the way was paved for nearly two decades of litigation on the unintended consequences of that ruling. The Compensation Act 2006 and ruling of the Supreme Court in International Energy Group Ltd v Zurich Insurance plc UK Branch [2015] Lloyd's Rep IR 598 meant that the liability insurer of any one employer was liable to provide an indemnity for the entirety of the loss even though the insurer was on risk for only a part of the period of exposure.

In R (On the Application of Aviva Insurance Ltd) v The Secretary of State for Work and Pensions [2020] EWHC 3118 (Admin) Henshaw J considered a further consequence of the Fairchild analysis, namely, the obligation of a liability insurer to reimburse the state for social security benefits paid to the victim. The question was whether the statutory reimbursement obligation was compatible with the Human Rights Act 1998.