A.M. Best Company Inc. recently released a revised estimate of $85 billion, net of reinsurance, in losses due to third-party liability asbestos claims to the United States property and casualty insurance industry.
Annual losses for both asbestos and environmental is now $127 billion, the Oldwick, N.J. credit rating agency stated in a special report released Dec. 10. All figures are in U.S. currency.
The “net ultimate” asbestos losses for the U.S. property and casualty insurance industry is now $10 billion more than the previous estimate, A.M. Best says.
"The increase in the asbestos estimate reflects the fact that the p&c industry continues to incur approximately $2.0 billion in losses per year while paying out $2.5 billion,” A.M. Best stated in the report, released Dec. 10. “With no end to these losses in sight, and given that total funding for insurers' asbestos losses now has reached $74 billion, it is clear that the asbestos problem will persist for many years to come."
Those losses are mainly third-party liability claims, said Gerard Altonji, assistant vice president for property casualty at A.M. Best.
In an e-mail to Canadian Underwriter, he wrote that these claims came from people who became sick sued corporations, such as asbestos producers and manufacturers of products such as brake linings and boiler linings.
He added the statistics in A.M. Best’s report do not include workers compensation claims, nor do they include Canadian statistics.
According to Health Canada’s website, asbestos fibres, when inhaled, can cause asbestosis, which is a scarring of the lungs. It can also cause lung cancer, cancer of the larynx and ovarian cancer.
Another major hazard is mesothelioma. According to the website of Mount Pleasant, S.C. law firm Motley Rice, which has represented asbestos claimants, mesothelioma is a cancer that affects the mesothelial cells that line the lung, chest cavity, abdominal cavity, heart cavity and the outer surface of most internal organs.
A.M. Best says the average claims for mesothelioma "appear to be increasing."
Although insurance asbestos losses dropped from $8 billion in 2002 to a little more than $1 billion in 2008, there has been a “focus on obtaining higher judgements for the more serious cases involving mesothelioma,” A.M. Best said.
Annual losses for both asbestos and environmental claims dropped 30% in 2011 after increasing 50% each in 2009 and 2010, A.M. Best said. However, it attributed the drop in 2011 to American International Group Inc. (AIG)’s loss in 2010, when it increased its absestos provisions by nearly $1.4 billion.
“One of the main problems with asbestos now comes from sprayed or ‘friable’ (easily broken up) asbestos used in buildings until the 1970s,” Health Canada states on its website. “Construction workers, tradespeople and other building maintenance workers may be exposed to very high concentrations of asbestos fibres during renovations and repairs to older buildings. The environment and work methods of these occupations are more difficult to control than fixed workplaces.”
Health Canada says asbestos has been used in various construction products including insulation board, floor and ceiling tiles and drywall joint cement.
Workers affected by asbestos come from a variety of occupations, according to Motley Rice, including aerospace, refinery, automobile manufacturing, mechanics, cement plant workers, custodians, protective clothing and glove makers and warehouse workers. Construction trades affected by asbestos include boilermakers, insulators, plumbers, steamfitters, plasterers, tile and linoleum installers, carpenters and welders.