Asbestos-related insurance claims will continue to increase in the future, according a recent report from A.M. Best, an insurance rating company. The report explains that insurers’ exposure to claims from mesothelioma, asbestosis and other asbestos-related medical claims could be as much as $11 billion more than the $23 that the insurance industry has reserved for these claims.
The A.M. Best report also notes that asbestos-related insurance claims have cost the industry $53 billion in the last 25 years. Asbestos, a naturally occurring mineral that was used for decades by many industries because of its heat-resistant prosperities, is made up of tiny fibers that can become airborne. When inhaled, they can lodge deep in the lungs and trigger the development of plural mesothelioma and asbestosis.
The Wall Street Journal news story about the A.M. Best report indicated the increase in future insurance claims is due to “increasing cost of each claim, the success rate of experienced mesothelioma attorneys, and the long latency period of diseases such as malignant mesothelioma.”
The challenge for the insurance industry is that asbestos-related diseases, such as mesothelioma, have very long latency periods. This means that shipyard workers, plumbers, pipefitters, mechanics, electricians and machinists, who worked with materials made out of asbestos, like brake shoes, plumbing and heating insulation, and electrical insulation could have been exposed long before government restrictions greatly limited the use of asbestos in these items.
While the total projected cost to the industry of $34 billion may seem large, Reuters states that the 2014 value of the global insurance industry is expected to be over $4 trillion, so this increase in asbestos costs will have little impact on the overall insurance market.
Source: Wall Street Journal, “Insurers May Face $11 Billion More in Asbestos Claims -A.M. Best,” Erik Holm, December 1, 2012