BRITAIN’S biggest insurers are in talks with the Government over plans to establish a state-backed fund to pick up the bill for claims from the next generation of industrial diseases, The Times has learnt.

The insurance industry is trying to protect itself amid fears that common features of the office environment, such as mobile phones and strip lighting, could have a damaging effect on workers.

Insurers are desperate to avoid another bill similar to that from asbestosis claims. Asbestos, a lethal industrial fibre that killed thousands of workers, is expected to cost insurers £10 billion over the next 30 years.

Royal & SunAlliance (R&SA), Britain’s largest general insurer, has led the recent discussions with the Department for Work and Pensions (DWP).

Other departments, such as the Treasury, the Department of Trade and Industry and the Department for Constitutional Affairs, are believed to be keenly interested in the outcome of the talks.

If the insurers get their way, employers will have to pay into a government-backed “industrial disease fund” that would compensate people with workplace-related diseases, some of which have not yet been discovered.

Duncan Boyle, chief executive of R&SA, said: “With medical and scientific advances, new diseases are being discovered all the time, but we can’t price for them if we don’t yet know what they are.

“Employers’ liability insurers fear that in 30 years, if it was discovered that, say, using a mobile phone was bad for your health and people had been forced to use them for work they would end up paying out billions of pounds in damages.”

Mr Boyle said that the effect of strip lighting and visual display units on eyesight was another potential long-term concern for insurers, as was the increasing prevalence of stress-related illnesses.

The Association of British Insurers (ABI) commissioned PricewaterhouseCoopers, the consultancy, to seek solutions to the problem. “The current situation is creating ever-greater uncertainty for both insurers and customers so we’re looking at alternative ways of funding compensation,” an ABI spokesman said.

“But we’ve got to think this through properly so it’s right for the industry and right for policyholders and the Government.”

Following its work with PricewaterhouseCoopers, the ABI has suggested that the Government set up and act as guarantor to an industrial disease fund, into which employers would pay an annual levy, possibly based on the industry in which they worked.

Industrial diseases would be defined as those that took more than five years to develop from the time of exposure to the dangerous material.

The CBI said that it was interested in the ABI’s proposal. “We have had a few conversations about it,” a CBI spokesman said. “Insurance is a big cost concern for individual employers so we’re keen to look at alternatives.”

The DWP is now waiting for the insurers to return with more detailed plans. A spokeswoman said yesterday: “We’re certainly looking at this and a range of other options”.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax