Hull councillors had to start paying after the insurance provider went into liquidation .
City councillors have been warned they might have to stump up more cash to settle historic compensation claims over asbestos-related illnesses.
The authority has paid a total of £3.5m in two separate pay-outs since 2014 to meet liability requirements following a court judgement two years earlier.
Rather than payments to individuals, the pay-outs were in the form of levy charges imposed after the council’s main insurance provider Municipal Mutual Insurance (MMI) went into liquidation in 1993.
The levy charges are pooled into a national pot which is then used to settle asbestos-related compensation claims.
Legal wrangles over liability issues following the liquidation of MMI went on for nearly a decade.
But in 2012, the Supreme Court ruled the insurer was liable to pay outstanding compensation to employees who had contracted mesothelioma, a fatal type of cancer linked to exposure to asbestos.
As a result, a so-called scheme of arrangement was triggered requiring councils such as Hull to pay levies into the national pot based on a percentage of the amount paid to creditors.
Hull paid just over £2.1m in early 2014 as a result of the ruling.
Then, following a further review of MMI’s financial position, the levy was increased from 15 per cent to 25 per cent.
Hull then provided another £1.4m to fund the additional levy.
Now, the city council’s chief finance officer David Bell has warned the authority might have to dip into its pockets once again.
In a new report, he said: “The scheme’s administrators have advised that it is possible that a further levy may be required to meet future cost but at the moment none is payable and, as such, further liabilities cannot be reliably quantified.”
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