Unknown liabilities always worry insurers. That’s why local government should be worried now.
At the Audit Committee today we became aware that County Durham, and many other local authorities, will move into uncharted waters if they end up bearing uninsured risks that could amount to millions of pounds, risks that all arise from before 1992.
It was in 1992 that Municipal Mutual Insurance closed its doors to new business, faced with mounting claims against employers by workers who had contracted mesothelioma from working with asbestos. Now the money is running out and it looks increasingly likely that Durham County Council will have to throw up to £2.5 million into the Municipal Mutual pot under a “Sheme of Arrangement” that it’s signed up to.
That’s bad enough for the county, but if that single payment by the local authorities concerned proves insufficient to meet the emerging liabilities then County Durham will itself become responsible for dealing with, and paying, any further legitimate claims by its employees. Fortunately for us all County Durham does hold over £10 million in an “Insurance Reserve”. We’ll have to hope that that proves sufficient in these uncertain times.