The ABI, AXA and Royal and Sun Alliance are in secret talks with the Government with a view to reaching an agreement for compensating victims suffering from pleural plaques, the scarring of the lungs caused by exposure to asbestos fibres. The move follows mounting pressure being placed on the Government to overturn the ruling of the House of Lords that pleural plaques, as a condition, is symptomless so victims cannot be awarded compensation. The pressure has come from both the unions and northern MPs who have many constituents affected by the ruling.

The Ministry of Justice is set to publish a consultation paper on the subject and the Prime Minister has already pledged to take action.

The secret talks between insurers and the Government are an attempt at damage limitation with the insurers keen to limit their exposure and in particular, to exclude lawyers from the compensation process. It is believed that the sum being considered is a flat £5,000 for each identified victim, an amount which is calculated to cost the insurance industry £500m.

Lawyers have expressed concern with such a system particularly if no checks are in place for victims who may in fact be in the early stages of mesothelioma. Few agree with AXA's spokesperson's opinion that asbestos related claims are 'relatively straightforward and there is no need for lawyers to be involved'.

The industry once again waits for the Government to make the next move.