U.S. property/casualty net asbestos losses are holding steady at $85 million. But that number could change in the future due to some big-time litigation variables, A.M. Best said in a new special report.
Those variables come, in part, from health problems relating to asbestos exposure, including mesothelioma and lung cancer. Alleged victims of both are increasingly suing for damage, and their health issues can take years to manifest, A.M. Best noted.
“In addition to the more traditional mesothelioma filings, the volume of lung cancer cases continues to grow as more attorneys seek to garner higher settlements in light of more successful suits (relative to past settlements),” A.M. Best said. “The number of such suits has grown significantly after years of declining case filings.”
As well, A.M. Best added that the increase of tobacco lung cancer cases in court and corresponding damages being awarded is influencing some expanded arguments in asbestos lawsuits.
“With more tobacco lung cancer cases going to court and more damages being awarded, asbestos plaintiffs are alleging that asbestos exposures are at least a contributing factor to lung cancer,” A.M. Best said.
A.M. Best noted that even a small increase in lung cancers caused by asbestos exposure could portent a big jump in lawsuits and liability cases.
“It has been alleged that if just 2-5 percent of new lung cancers are caused by asbestos exposure, that would translate into approximately 3,000 to 5,000 new cases per year,” A.M. Best said.
Adding to the likelihood of more asbestos-related legal issues, A.M. Best pointed out that some studies have identified a bigger chance of developing cancer in patients who have experienced both asbestos and tobacco. This trend won’t be clear for a while, however, considering how long it takes from asbestos exposure to develop of mesothelioma. If that’s the case, asbestos cases should still continue at a healthy clip, according to the report.
“It is likely that asbestos losses will continue unabated for many years,” A.M. Best said. “As a result, there could be upward pressure on A.M.Best’s ultimate industry loss estimates.”
A.M. Best said that total asbestos and environmental (A&E) losses increased in five of the past seven years (through year-end 2013), with 2008 and 2011 posting respective declines of 35 percent and 31 percent. On the other hand, A&E losses jumped by 16 percent in 2013, after rising modestly in 2012.
While net asbestos losses in U.S. property/casualty remain at $85 billion, net environmental losses are at an estimated $42 billion. By the end of 2013, the industry funded just over 90 percent of its aggregate asbestos and environmental exposures, leaving an unfunded liability of $6.7 billion for asbestos and $3.9 billion for environmental.
The vast majority of A&E losses stem from asbestos exposures, a trend that is consistent with previous years, A.M. Best said.
Source: A.M. Best