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Asbestos settlements may reach $200 billion
Although most asbestos exposures in the United States occurred prior to 1970 — when the Occupational Safety and Health Administration implemented limits on exposure and use of the hazardous material — the number of asbestos-related claims has increased dramatically and the costs will, too.
|"Asbestos is the Energizer Bunny of toxic torts. It just keeps going and going and going."|
With 50,000 to 60,000 new claims filings against some defendants in 2000, compared to averages of around 20,000 in the mid-1990s, the total cost of asbestos-related settlements will ultimately reach $200 billion, says a study released by Tillinghast-Towers Perrin.
Of this, the lion's share will be borne not by the asbestos defendants themselves, but by overseas insurers (31 percent) and U.S. insurance companies (30 percent), the study says.
According to Mike Angelina, an actuary with Tillinghast and one of the co-authors of the study, most of the increase comes as a result of less serious medical problems than the lung cancer and mesothelioma cases that have dominated asbestos claims in the past.
"The propensity to sue for non-malignancies has clearly increased," says Angelina. "Over 450,000 claims have been filed to date and we project that close to 1 million claims will be filed before the litigation ends, absent some type of federal legislation."
With these new claims, Tillinghast estimates that asbestos has now overtaken hazardous waste as the most expensive environmental liability for U.S. property/casualty insurers.
The estimated $55 billion to $65 billion in asbestos-only claims is expected to bring the ultimate cost to U.S. insurers of asbestos and environmental (A&E) claims to between $85 and $105 billion. The U.S. insurance industry has already paid $41 billion and holds $23 billion in reserve for A&E claims.
"Asbestos is the Energizer Bunny of toxic torts. It just keeps going and going and going," says Angelina.