Washington, DCJust last year there were reports that asbestosis lung disease and asbestos lawsuits were decreasing, having peaked about a decade ago. Not so, according to The Wall Street Journal (12/17/12). The insurance industry says previous estimates fell short to the tune of 10 billion dollars.
Asbestos was widely used right into the 1970s, although most injuries caused by asbestos exposure occurred during World War II, in US shipyards. Although asbestos lawsuits likely peaked in the early 1980s against the Johns-Manville Corporation and others who had purposefully suppressed the dangers of inhaling asbestos to cut costs in the course of mining and manufacturing asbestos-containing materials, asbestos-related diseases such as asbestosis and mesothelioma can take 30 or even 40 years to manifest, so new asbestos lawsuits continue to be filed.
Companies such as Johns-Manville claimed bankruptcy, much to everyone’s surprise at the time. And by the 1990s it was evident that other companies were heading in the same direction. With so many companies bankrupt yet so many asbestos lawsuits in the wings, asbestos litigation focused on other defendants--often 20 or 30 entities--such as companies that made asbestos and manufacturers that made parts containing asbestos.
As well, given the increasing costs of asbestos claims, from legal fees to medical bills, it is no wonder that “sizable losses are likely to continue for years," reported ratings firm A.M. Best.
Over the past 25 years insurance companies have coughed up about $51 billion in asbestos claims and the insurance industry has set aside another $23 billion for future expenses. According to the WSJ, an extra $11 billion in unexpected costs over the course of several years wouldn't be enough to cripple the insurance industry. It could, however, put investors of such insurance companies on alert. Historically they have shied away from investing in companies that have announced major additions to reserves on longstanding liabilities such as asbestos. In other words, there is bound to be a fall-out…
According to this latest report by A.M. Best, insurers are posting nearly $2 billion in losses each year and the "loss trend remains worrisome”.
Gerard Altonji, an analyst at A.M. Best, said that the plaintiff's bar has focused on obtaining higher judgments for the more serious cases involving mesothelioma. Given the long latency period between exposure to asbestos and the manifestation of mesothelioma, as well as the very large number of people exposed over a great many years...it is likely that asbestos losses [for insurers] will continue to develop for many years to come.
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