Compensation myths – It is unfair on insurance companies having to pay out

2 minute read  |  November 14, 2017

We revisit the myths and see if they still hold true in the hope that the phrase ‘compensation myth’ will finally be put to bed.

In last week’s article, we confirmed that compensation is paid for any old accident is a myth having looked at the stats and burden of proof to finally put that spurious claim to bed.

This week, we take a closer look at the fifth of the seven myths;

It is unfair that insurance companies should have to pay out for diseases such as asbestos-related diseases where they could not have known the risk

This should be a relatively short open and shut case. One of the key responsibilities of insurance companies is to assess risk and price premiums accordingly.

There have been health and safety control rules on asbestos since 1931 and the risks have been known since the 1940s. When insurance companies investigated the risks of asbestos related diseases they would have been able to look back over these controls and health risks and create the appropriate policy.

Insurance companies took the premiums and entertained the risk that these claims would never develop, unfortunately for victims of asbestos related diseases such as mesothelioma, that risk backfired and as a result insurers were met with hefty pay-outs.

Conclusion

Insurance companies spend a lot of time and money on assessing risk. On this occasion, they were presented with evidence and took the chance.

Advances in medical research and health and safety provisions in the workplace will go some way to ensuring that in the future claims for industrial diseases such as hearing loss and mesothelioma will be rare. One thing is for sure, insurance companies will endeavour to triple check any associated risks on any policies they underwrite.

It is unfair that insurance companies should have to pay out for diseases such as asbestos-related diseases where they could not have known the risk – myth.

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