A Government compensation scheme supposed to help the families of people killed by exposure to asbestos was too heavily influenced by the insurance lobby, a parliamentary inquiry has found.

The Justice Select Committee investigated how the Government had decided on a new compensation programme paid for by insurance companies and found the process gave insurers an unfair advantage. They discovered the Coalition entered into a secret deal with insurers before deciding on the amount of compensation payable, the details of which they refuse to publish.

More people are killed by asbestos than road traffic accidents, with around 2,500 people dying every year from exposures which happened up to half a century ago. Because of the time-lag between exposure and a cancer developing many people cannot trace the insurer of the employer which allowed them to inhale the lethal fibres with no protection.

The insurance industry has saved billions of pounds by not paying out on old policies because their details cannot be found. The announcement of a compensation scheme was a breakthrough for the families of asbestos victims, but they were disappointed when it emerged that they face being charged up to 25 per cent of their awarded damages to pay for legal costs.

Committee Chairman Sir Alan Beith said: “We have concluded that the Government’s approach has been unsatisfactory on a number of counts.” The committee said a heads of agreement was made between the Government and the Association of British Insurers, adding that the coalition was not open or transparent about the existence of the document.

Sir Alan added: “It was a surprise to us that the Government concluded a heads of agreement, however informal its status, with parties on one side of the argument about mesothelioma.

“The provisions of this document, which remained undisclosed to other interested parties, have shaped the Government’s approach to this issue, and we are concerned that the Government appears to have had no intention of supplying us with this document as part of our inquiry.”

TUC general secretary Frances O’Grady said: “The Justice Committee is right to criticise the shoddy deal done between the insurance industry and the Government. Victims of this terrible and fatal illness deserve proper and swift recompense.

“We hope that the Government will urgently accept the recommendations of the Justice Committee and do the right thing for the victims of mesothelioma, 2,500 of whom die each year as a result of exposure to asbestos through their employer’s negligence.”

A Ministry of Justice spokesman said: “Mesothelioma is an awful condition which can destroy lives in a frighteningly short amount of time and we want to help sufferers and their families. We are considering the best way to get claims settled fairly and quickly. We will consider the report’s recommendations and respond in due course.”

James Dalton, head of motor and liability at the Association of British Insurers, said: “While insurers did not cause mesothelioma, the industry has always been open and transparent on its commitment to help as many mesothelioma claimants and their families as possible. We make no apologies for negotiating with Government a scheme, paid for by insurers that will compensate an extra 3,000 sufferers over the next 10 years, who would otherwise go uncompensated.

“Significantly, this report raises the issue of high legal costs in mesothelioma claims, citing an average legal cost of £20,000 for every mesothelioma claim in England and Wales. Excessive legal costs mean higher insurance premiums for all employers, and clearly claimant lawyers need to answer to why they do not support lower legal costs.”

If you or a family member have been affected by mesothelioma please contact us today on Freephone 0800 294 3065 or talk to us on live chat where we will be happy to answer any questions you may have.