Black Lung: Insurance’s next asbestos?
- All Mining Sector Participants
- Directors / Senior management / Human Resources Personnel
Once thought eradicated from the Australian coal mining industry, coal workers pneumoconiosis (CWP) has been re-identified. According to the Queensland Government, as at 14 June 2017 there have been 22 confirmed cases of CWP reported to the Department of Natural Resources and Mines since May 2015, with a sharp escalation anticipated.
The parliamentary committee inquiry into CWP in noted “catastrophic failings” in QLD.
What is Black Lung?
Pneumoconiosis is a potentially fatal disease caused by prolonged exposure to coal dust, more commonly known as “black lung” because those with the disease have lungs that look black instead of a healthy pink.
And it’s not just underground, confined space mines that are contributing to the disease – 2 of the 22 cases confirmed only worked in open cut mines throughout their careers.
17 of the top 20 ‘dustiest’ coal mines are in Queensland according to the latest National Pollution Inventory which assessed emissions for the 2015-16 period.
While management of CWP is a workplace health and safety issue facing all industry participants, the correlation between emissions and the escalating cases of CWP in Queensland are too coincidental to ignore.
Workers Compensation insurance will generally respond to cover workers for medical expenses and potential common law claims against their direct employers.
However, claims from contracted and labour hire personnel will land squarely on Public Liability insurance programs of mining companies and their head contractors. In respect of establishing indemnity, comparisons may be drawn to the asbestos decisions made on James Hardie; i.e. liability allocated based on time spent at exposed sites.
While CWP will not be as broadly devastating by volume case count as asbestos related claims; from an insurable risk perspective, insurers will be very sensitive to the future exposures they face.
In asbestos cases, most of the liability exposure has rested with manufacturers and in the case of CWP the majority will likely rest with the coal mines. As with asbestos claims, by the time CWP sufferers bring claims against coal mines, WorkCover will have paid substantial statutory compensation to CWP sufferers including (under the proposed Workers’ Compensation and Rehabilitation (Coal Workers’ Pneumoconiosis) and the Legislation Amendment Bill 2017 recently introduced to Parliament) lump sums of up to $120,000.
WorkCover will have a first charge on any settlement/judgment payments by coal mines to CWP sufferers. The critical issue here is can the Public Liability programs respond adequately under the current (and historic) terms and conditions imposed by insurers?
Asbestos is now an industry standard total exclusion on Public Liability insurance. We have seen some insurers introduce ‘Silica’ exclusions in the last 5-10 years and expect them to potentially broaden the current exclusions dealing with dust inhalation to capture CWP specifically to remove potential technicalities.
What is the ‘go forward’?
Managing the issue through screening and early identification is already on the agenda for Government, but has the horse bolted? Given the emissions and increased case count in Queensland, we expect to see far more incidents before the exposures are reduced through dust management initiatives.
The long-latency of the disease will pose similar issues to asbestos with industry participants potentially needing to look retrospectively at the Public Liability insurance programs held over the last 10-30 years as new and previously unidentified cases become known.
– Adam Battista, Allegiant IRS
– Brooke Jacobs, McCullough Robertson