Insurers and reinsurers are becoming increasingly at odds over who should shoulder the burden on asbestos claims, says a new report from rating agency Standard & Poor’s (S&P). “Asbestos Driving a Wedge Between Insurers and Reinsurers” predicts the fighting will intensify in the coming months. “Disputes between insurers and reinsurers appear to be intensifying,” says Steve Dreyer, managing director with S&P. “The tone is getting ugly.” On the heels of major reserving for asbestos by many insurers in the last quarter of 2002, reinsurers have not stepped up to take the burden primary markets might have expected, the report notes. Using the example of ACE Ltd, which is planning for US$2.2 in gross reserve, but only took a net reserve of US$500 million on expectation of reinsurance backing, the report notes that there remains a question of how much will actually be ceded by reinsurers. “It’s smoke and mirrors,” says John Iten, a director with S&P. “The liabilities are disappearing into thin air, and nobody’s capturing them.” While there is an expected lag between primary reserving and reinsurer action, but the report says primary insurers are also failing to inform reinsurers what portion they expect will be covered, although this expectation is built into the numbers.