Friday, December 4, 2009
Ratings agency A.M. Best has upped its estimate of how much asbestos losses could cost the U.S. property/casualty industry to $75 billion, from $65 billion. The revision comes as A.M. Best reports the U.S. p/c industryâ€™s asbestos and environmental losses were down nearly 50 percent in 2008. In its latest market review of U.S. asbestos and environmental liabilities, A.M. Best says the increase in asbestos estimates reflects ongoing, elevated levels of annual incurred losses, as well as a subtle shift of losses away from products liability claims to more costly non-products claims against more peripheral defendants. This shift in emphasis has resulted in some opening up of policy limits, A.M. Best notes. Efforts at tort reform have also had mixed results, with some jurisdictions still proving problematic for asbestos defendants. Also affecting asbestos losses is a growing proportion of settlements in more serious cases, principally related to mesothelioma, which is increasing the average values of such claims. Some 1,500-2,000 mesothelioma claims have been filed annually over the past few years and as a result A.M. Best says the industry is likely to continue incurring losses for asbestos liabilities for years to come. Release of the report comes as the trust funds set up to resolve some of the lengthy asbestos-related litigation face growing criticism. According to a December 3 Wall Street Journal article by Nathan Koppel, insurers and legal experts contend that the funds are not transparent, paying claims that may not be valid and providing excessive amounts to plaintiffsâ€™ lawyers. Some 40 asbestos trusts were set up with court approval by Johns Manville Corp., Owens Corning and other asbestos manufacturers to oversee around $20 billion in assets. According to consulting firm Bates White LLC, the assets of these funds have nearly tripled since 2005 and they paid out some $3 billion in claims in 2008, more than double the previous yearâ€™s total. Check out the Wall Street Journal Law Blog for more on this story. Check out I.I.I. background information on asbestos liability.