Insurance companies are keen to have a say in negotiations between the Australian Council of Trade Unions (ACTU) and James Hardie Industries as to whether a statutory scheme for asbestos claims will be established.

Interestingly, the NSW Government – a significant holder of asbestos liabilities in Australia – has delegated responsibility for the negotiations to James Hardie and the ACTU.

Although the report by David Jackson QC in the special commission of inquiry into the handling of James Hardie’s asbestos liabilities has recommended that a statutory scheme be set up, the ACTU and state governments have rejected the proposal.

One insurance industry source says NSW Premier Bob Carr has been “politically smart” to threaten a nationwide boycott of Hardie products – which was backed by Victoria, South Australia and Queensland – but taking on the statutory scheme negotiations would mean losing popularity with the unions and the victims, as they are against a statutory scheme.

“Insurers are champing at the bit to get a seat at the negotiating table so they don’t get dudded,” our source said. “If James Hardie is the only party included in the scheme, plaintiff lawyers will have a field day with everyone else.

“General defendants accept their obligation to cope with asbestos liabilities but what they don’t accept is the litigious adversarial process where plaintiff lawyers may stack another 30-50% in legal fees on what should be paid if there is a statutory scheme.”

QBE Australia MD Raymond Jones says the federal and state governments are aware of insurance companies’ desire to be included in negotiations on a statutory scheme.

A recent KPMG insurance report says the total cost of Australian asbestos liabilities may exceed $8 billion. Corporate liability for asbestos claims is estimated to be $2.5 billion, with James Hardie accounting for $1.5 billion.

The NSW Dust Diseases Tribunal accounts for $1.2 billion of claims, general insurers are up for an estimated $2 billion and state and federal governments account for $2.5 billion. The NSW Government’s exposure is $900 million.

The industry source says the NSW Government has substantial asbestos liabilities as an employer of workers at power stations, hospitals and rail yards. “Why would you hand over the responsibility to come up with a solution that may disadvantage you?”

A spokesman for the Insurance Council of Australia says there is still no industry position on asbestos liabilities. When you consider the size of insurers’ liabilities – and the chance the insurers could become the plaintiff lawyers’ next source of riches – you have to wonder why.