February 22, 2005 by Canadian Underwriter
Insurers have some reason for “cautious optimism” when it comes to silica claims, according to a new report by reinsurance broker Guy Carpenter.
The report, which is a follow-up on a fall, 2004 study, notes two recent developments which auger well for insurers. First, in the case of Gomez v. Humble, Gomez had been awarded US$2 million in damages in county court, arguing he suffered silicosis as a result of silica flint Humble had supplied to his employer, Spincote. But last September, the Texas Supreme Court found a silica supplier’s duty to warn of the product’s dangers was dependent on whether the supplier could effectively reach its customers’ employees, and since this evidence was not provided, a new trial has been ordered in the case. While this does not represent a victory for the so-called “sophisticated user” defense, it was not a defeat either, leaving the door open for such a defense to be pursued in future cases. “The Court also made it clear that an objective standard (the knowledge of the industry) rather than a subjective standard (Mr. Gomez’ knowledge) applies,” Guy Carpenter notes.
Also in the Texas Supreme Court, the court’s “multi-district litigation panel” consolidated 71 cases filed in 55 district courts last November. While some of 158 defendants had argued for or against consolidation, the majority remained silent on the issue. Consolidation is viewed as favorable for the defense, as it allows for more experienced jurists making decisions, but whether this will bear out in court remains to be seen.
Guy Carpenter also notes that, unlike asbestos, the number of deaths where silica is an underlying or contributing cause is decreasing. However, there is distressingly little hard information on what the industry’s ultimate exposure to silica could be, the report concludes.