Asbestos loss payouts rise: Best
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U.S. asbestos loss payouts continue to rise, growing by 9% to $3.2 billion in 2016 compared with 2015 despite a drop in incurred losses, A.M. Best Co. Inc. said Wednesday.
The 2016 total of $3.2 billion is greater than the long-term average of $2.4 billion, according to the new Best report, Asbestos Losses Continue to Rise; Environmental Losses Remain Stable.
Payouts climbed despite a 24% year-over-year drop in incurred asbestos losses, leading to an overall 17% decline in asbestos and environmental incurred losses in 2016, according to Best, which is maintaining its estimate for net asbestos losses for the U.S. property/casualty industry at $100 billion, with net environmental losses estimated at $42 billion.
The report added that the industry has paid out $17.6 billion for asbestos and environmental claims over the past five years while incurring $13.6 billion in losses over the same period.
Noting the imbalance, Best said it believes that at the current payout levels, all A&E reserves will be depleted in roughly seven years, barring additional reserve strengthening.
“Asbestos losses have shown no sign of subsiding, with the industry reporting an average of $2 billion in additional losses each year during the 2012-2016 period, and annual asbestos loss payments have exceeded $2 billion every year since 2002,” Best said in the statement. “Quantifying the industry’s ultimate loss exposure is extremely difficult as the evolution of asbestos medical effectiveness through improved therapies, emerging drug combinations and early diagnosis continues.”
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