What are the risks to loss adjusters and insurers with asbestos?

​Insurers and loss adjusters need to be aware of, and understand, asbestos-related risks for a number of reasons. After all, if an insurer that covers damage to a building and its contents receives a claim from a policyholder in relation to an “insured event” such as fire, flood, storm, subsidence, or the escape of water, the given property may contain asbestos that might have also been damaged.

Asbestos – which has been illegal to import and use in the UK since 1999, but is estimated to still be present in as many as 1.5 million buildings across the country – is believed to pose negligible risk to health if it is in good condition and undisturbed.

In the event, however, of either minor or much more substantial and serious damage being caused to a property and/or its contents, it is feasible that any asbestos-containing materials (ACMs) inside could be disturbed. This could result in the release of potentially extremely dangerous asbestos fibres into the air.

Concerns have been raised in recent years that if, for example, a loss adjuster ventures into a part of a damaged building where asbestos may be present, they could potentially be putting their health at risk without even being aware of this.

So, what are some of the exact asbestos risks that could arise for insurers and loss adjusters in such scenarios, and what steps could be taken to combat those risks?

What are the specific risks of asbestos exposure for loss adjusters during property claims?

The fibrous silicate mineral known as asbestos was first commercially mined in the mid-19th century, and came to be used heavily in the UK construction sector over the century or so after this.

The naturally occurring substance was highly regarded due to such qualities as its physical strength, fire resistance, and effectiveness as an insulator. This reputation led to the material being incorporated into products such as asbestos insulating board (AIB), asbestos cement roof tiles, textured decorative coatings, and thermal insulation (lagging).

The final 1999 ban on all forms of asbestos did not include an automatic requirement for ACMs already in UK buildings to be removed. This means that, at least in theory, a representative for the insurer who conducts an in-person visit to a damaged property to assess the situation after the policyholder makes a claim, could inadvertently be exposed to disturbed asbestos.

How adequate is the current training for loss adjusters to handle asbestos risks?

Questions have been asked in recent years as to whether the level of asbestos awareness and safety training provided to loss adjusters is sufficient in light of the risks they could face when visiting and inspecting a damaged building in person.

The argument for current training being inadequate is that many loss adjusters investigating claims in relation to an “insured event” – such as the flooding of a property – may venture into areas of a property where asbestos surveys haven’t been undertaken.

There are worries that if a building is flooded or is subject to a similar peril such as a fire or storm, the integrity of the property could be impacted. This could result in asbestos fibres contained in floors, walls, and ceilings being brought to the surface.

A counter-argument, however, is that loss adjusters do receive considerable training, with the majority of them having at least received a basic level of asbestos training that enables them to identify suspected ACMs by sight.

Still, the aforementioned concerns underscore the importance of loss adjusters being given a level of training that matches the work they will actually be doing.

If, for example, the insurer representative who visits a property will only need to inspect damage and will not disturb ACMs, asbestos awareness training may be sufficient. If, however, the disturbance of ACMs will be part of the employee’s duties, there will be a need for them to undergo a more detailed level of asbestos training.

What legal obligations do insurers and loss adjusters have regarding asbestos?

The Control of Asbestos Regulations 2012 (CAR 2012) provide the overarching regulatory framework for the management of asbestos in the UK. Insurers and loss adjusters will need to be well-informed on the requirements set out by this legislation in relation to the “duty to manage” asbestos, training, notifications of work to the Health and Safety Executive (HSE), and much more.

As we have already referenced in this article, training is a vital area of consideration for insurers and loss adjusters that may conceivably come into contact with asbestos. Regulation 10 of CAR 2012 provides more detail on this, making clear that employers must ensure anyone liable to disturb asbestos during their work receives the information, instruction, and training that they need in order to undertake their work safely.

When a policyholder has reached out to an insurer to make a claim on their policy and alerts the insurer to the presence of ACMs in the damaged building, the insurer will need to provide this information to the party that it appoints to inspect the property.

As well as the training element, the insurer should be aware of the legal requirement for an asbestos register, applicable to non-domestic premises under CAR 2012.

As we have previously written about, an asbestos register is a document that shows the results of an asbestos survey carried out on a property. It should therefore contain vital information on all the ACMs that exist in the building, which is why the insurer representative should request and inspect the asbestos register before entering the property, or as soon as possible during the visit.

What are the risks to insurers when asbestos is involved in claims?

Discoveries of asbestos in a damaged building during claims adjustments can have financial implications that insurers must be mindful of, including a potential for increased claims and compensation demands. This applies particularly strongly in light of recent changes to compensation guidelines under the Mesothelioma Act 2014.

The Mesothelioma Act 2014 was passed into law on 31st January 2014. This legislation constituted recognition by the UK Government of the difficulties that many sufferers of mesothelioma encountered when attempting to trace a former employer (or that employer’s insurers) that exposed them to asbestos.

The Act set up a compensation scheme, the Diffuse Mesothelioma Payment Scheme (DMPS), which was launched on 6th April 2014. This scheme, paid for by a levy on the employers’ liability insurance industry, makes payments to people diagnosed with diffuse mesothelioma on or after 25th July 2012, who contracted the disease as a consequence of negligent exposure to asbestos at work in the UK, and who are unable to claim damages due to the employer no longer existing and the liability insurer of the employer not being traceable.

Between April 2014 and February 2015, the regulations in relation to the scheme stipulated that successful applicants be paid an amount equivalent to 80% of the award they could have typically expected to receive had their claim been pursued successfully through the civil courts system.

In February 2015, the tariff payment for the scheme was heightened. This meant that successful applicants who had received their mesothelioma diagnosis on or after 10^th February 2015 were awarded 100% of the award that they could have typically expected to receive if they had made a successful claim through the civil courts system.

How should loss adjusters and insurers mitigate asbestos exposure risks?

If asbestos is suspected or known to be present in a property that an insurer representative or contractor is due to inspect, they will need to follow certain best practices to help ensure legal compliance and their personal safety on-site.

Even as early as during the “first notification of loss” (FNOL) call between a customer and their insurer or broker, if the customer has communicated that asbestos is present in the area of damage, the insurer should advise the policyholder to avoid the area of damage as far as possible ahead of the inspection. If it is possible for the customer to close an area or room off, they should be advised to do this.

Once an individual or contractor has been appointed by the insurer to inspect the damage, they should carry out a pre-visit risk assessment. This can be done over the telephone with the customer, on the doorstep before the insurer representative enters the building, or a combination of both. Such factors as the building’s age, whether it has been extended or otherwise modified, and the likelihood of ACMs being present, will need to be considered.

When the actual visit takes place, a “suitable and sufficient” risk assessment will need to be carried out, prior to any work beginning. This is essential in order to identify any asbestos risk. What counts as “suitable and sufficient” may be influenced by whether the asbestos survey is available, as well as the extent of the property damage.

In the event of the loss adjuster or contractor believing there is a possible risk of ACMs being present in the area of damage, the immediate advice should be to isolate and vacate the affected areas of the building until the ACMs can be confirmed.

In addition to carrying out a proper risk assessment, the loss adjuster or contractor should wear personal protective equipment (PPE) in appropriate circumstances, such as where airborne ACMs seem to be present, or if there is a factor that might create airborne ACMs while the inspection is undertaken.

There may ultimately be a need to engage a specialist asbestos removal firm – in which case, the contractor chosen should be competent enough to carry out the necessary work. If, for example, the asbestos work to be carried out is licensable, it will be essential for the contractor carrying out this task to hold a licence from the HSE.

Conclusion: insurers and loss adjusters must be mindful and proactive in light of evolving asbestos risks

We have sought to make clear in this article the importance of robust risk management for insurers and loss adjusters – not only to ensure legal compliance, but also so that such professionals can best maintain their own safety, and that of others, when carrying out in-person inspections of a damaged property.

As “legacy” asbestos-containing materials within buildings dating from before the 1999 ban are at risk of continuing deterioration and damage – including as a consequence of “insured events” such as fire, flood, and storm – it is vital to acknowledge that the asbestos risks to insurers and loss adjusters are evolving ones. There will therefore be a need for continuous improvements in training and procedures to help combat these risks.

Here at Oracle Solutions, we continue to stand ready to assist commercial clients with their requirements for asbestos surveys, removal, and/or training, to cite just some of our areas of expertise. To learn more and to request your quote, please contact us by phone or email.