Ultimate asbestos liability totals remain elusive
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Decades after it became a major issue, insurers' ultimate asbestos liability remains unknown, according to a report by rating agency A.M. Best Co. on asbestos and environmental losses issued Tuesday.
“The continuing evolution of asbestos medical effectiveness through improved therapies and emerging drug combinations and early diagnosis, combined with ever-evolving litigation strategies, continue to make it difficult to put finality to the ultimate costs associated with asbestos for insurance companies,” says the report by Oldwick, New Jersey-based Best.
“Despite more than $12 billion in asbestos loss payments over the past five years, asbestos loss reserves have decreased by less than $2 billion, says the report. “This reflects the industry's uncertainty as to when, if ever, asbestos litigation will end and a desire to maintain loss reserves at prudent levels.”
The report says Best continues to maintain its estimate for net asbestos losses for the U.S. property/casualty industry at $85 billion with net environmental losses estimated at $42 billion. The industry paid out $3.5 billion in asbestos and environmental claims in 2014, while funding $2.1 billion in losses, according to the report.
The industry has paid out a cumulative $91.1 billion in combined asbestos and environmental losses, and maintains a reserve of an additional $27.3 billion to fund future payments of legacy liabilities, according to the report.
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