Insurance: Long tail lives on beyond James Hardie collapse

The problem arises from a surprising cause: the use of recycled materials.

The situation is simple: for decades, James Hardie used hessian sacks to transport jute and other materials including fibreglass. The sacks were unloaded by hand, emptied and then sent off to be converted into underlay. That underlay was sold and laid in homes and commercial premises all over the country.

But recent analysis of outbreaks of fibreglass-related diseases have shown a common link: the tossing around of those sacks.

Now there is concern that millions of premises still have that hessian underlay - and with it the dangerous fibres - and that residents and even carpeting contractors are oblivious to the risk.

James Hardie group grew into a large and complex group of companies including financial services divisions. But for most of the companies' lifespans of around 100 years, they were major producers and suppliers of asbestos.

The company was one of the first to recognise and warn of the risks of asbestos-related diseases, and to place warning labels on its products. It stopped the reuse of the sacks in the mid 1970s. A decade later, it pulled out of asbestos production altogether.

But that didn't solve the problems that came from the latent effects of the fibres and starting in the late 1990s, claims started to mount alarmingly. Estimates of the total liability began to look seriously inadequate. The directors tried to ring-fence various assets, and to make available substantial funds in a special purpose vehicle in the expectation that that would meet all claims.

But the claims kept mounting - and in 2004 it became clear that the amount provided would be insufficient. Various schemes were put forward by the company but the one with the most promise almost came to nothing because the company wanted to create a compensation scheme that was tantamount to a charity i.e. the money it put into the fund would be tax deductible. Initially, the government refused that plan but eventually it came into effect.

The cases still keep piling up - and the latest news will cause yet more drain on the fund, and on insurers and the health services.

Inquiries by regulators into the conduct of the company's directors are continuing.

Australia has suffered more than most other countries, per capita, from the asbestos related diseases because of the widespread use of asbestos roofing sheets and insulation, including its use in building materials.