Asbestos, Pollution and Other Health Hazards
Losses to the insurance industry from asbestos-related claims have surpassed all other losses that the industry has been faced with in recent decades. This has affected a large number of insurance and reinsurance companies, for which historical asbestos, pollution and other health hazard liabilities have been a source of continued reserve deteriorations.
The insurance industry’s exposure to asbestos claims is not just limited to exposures arising in the US; the industry also faces significant liabilities from exposures arising in the UK and elsewhere in Western Europe.
Asbestos-related liabilities should be assessed as part of insurance companies’ regular reserving exercises. Defendant companies need to assess their gross liabilities and separately estimate the expected insurance recoveries for asbestos claims.
Recent months have seen some significant legal developments affecting UK asbestos claims.
- The House of Lords (Oct 2007) ruled that Pleural Plaques are not a compensatable disease. The landmark judgement upheld the Court of Appeal ruling in January 2006. The trade union Amicus has estimated that there are around 14,000 pleural plaques cases a year, accounting for around 75% of all UK asbestos-related claims.
- The Compensation Act 2006 was amended by the Government so that in mesothelioma cases, negligent employers are effectively joint and severally liable to claimants.
- A number of test cases on the specific wordings used in public liability and employers’ liability policies are due to start in the summer of 2008. These will aim to establish where the liability lies for insurers facing asbestos-related claims.
- We have significant experience of estimating insurers’ asbestos liabilities arising in the US, UK and elsewhere.
- We have developed in-house models to analyse asbestos liabilities separately by type of disease. Application of such models is particularly relevant given the nature of the legal environment surrounding these types of liabilities.
- We have adapted our approach to:
- incorporate exposure and claims information;
- model claims frequency and severity as separate items; and
- apply results from epidemiological studies in respect of various populations in the estimation of future claims reporting.
The approaches that we have developed are readily adapted to the analysis of other latent claim types, such as pollution and health hazard liabilities.
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