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Miss Johnson: My hon. Friend is right to say that, as the pre-1990 claims matured, it was necessary to realise assets other than those from the profits accruing from the subsidiary. As that was the main fixed asset of the organisation, the value locked within it, in the form of existing policies and future profits, had to be realised. It was decided that the subsidiary should be sold on as a business to create liquid assets. As my hon. Friend the Member for Jarrow said, that subsidiary was sold to QBE International Insurance Ltd. in early 2000. The money that
was made was invested and could be used to meet claims. The names were changed as part of the deal when Iron Trades was sold to QBE, and the remaining holding company changed its name to Chester Street Insurance Holdings Ltd.Earlier this year, information on developments in asbestos claims showed that, despite all the efforts and the preventive measures, Chester Street could no longer meet its liabilities. The directors announced insolvency and appointed provisional liquidators on 9 January. A scheme of arrangement was drawn up which was agreed unanimously at the creditors meeting on 5 February and sanctioned by the court. The role of a scheme of arrangement is to ensure that the assets of an insolvent insurance company are identified, maximised and protected for the benefit of all outstanding and future claims--in this case, against Chester Street. It is the responsibility of the scheme administrator to ensure that policyholders receive whatever they are due from the insurance company under the scheme of arrangement.
As for an inquiry into the reorganisation of the Iron Trades Employers Association, we are looking closely into the issues raised by Chester Street. Our priority is the plight of the individuals affected by its collapse. It is for those people that the time scales are the most demanding, and we are keen to resolve the issue as soon as possible. However, in the event that information comes to light as we examine the history and circumstances which would suggest impropriety of any sort, I assure the House that the Government will take it very seriously indeed.
The issue of individual claims by employees whose employer no longer exists and whose claim relates to a non-compulsory insurance policy held by their former employer was raised.
Mr. Frank Cook (Stockton, North): On the insurance company, does my hon. Friend concede that if Iron Trades is allowed to get away with its actions, that will give any insurance company carte blanche to offload its liability and move its assets wherever it wants? That is tantamount to the practice prevalent in the travel industry before the creation of the Association of British Travel Agents, with its reservoir funding for affected companies. Surely we need to impose something similar; we do not need to argue about that. We should engage the industry, in partnership, to establish a similar funding structure.
Miss Johnson: I entirely agree with my hon. Friend that the industry cannot stand by and let individuals suffer as a result of the collapse of Chester Street. However, he will appreciate that his remarks contain assumptions with which I cannot directly agree.
We are considering complex issues with regard to individual claimants. The Government are working with the insurance industry on Chester Street and the position of employees whose claims relate to a non-compulsory insurance policy held by a former employer who no longer exists.
We are currently awaiting further information from the insurance industry, but as I said, we have made it clear, as has my right hon. Friend the Secretary of State for Scotland, that it cannot walk way from Chester Street. We expect the industry to take a constructive approach to the issue. The Government recognise that this is a difficult issue that has to be resolved within demanding time
constraints, and I assure my hon. Friend the Member for Jarrow that all those involved are working very hard to resolve the issue as soon as possible.I repeat that the Government understand the concerns expressed in the debate, especially of those who are suffering from asbestos-related diseases as a result of their exposure in the workplace, and of their families. We are
monitoring the situation carefully, in the interests of all who are affected by the insurance company's insolvency. I thank my hon. Friends for their role in making sure that the issue is seriously considered and dealt with.
- Adjourned accordingly at ten minutes past Nine o'clock.
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