Asbestos Liability

The first asbestos related lawsuit became a reality in Texas, USA about four decades ago. Up until the end of 1970’s close to 1.000 asbestos cases were filled in federal courts across the USA. Claim fillings began to increase dramatically in the first half of decade of th 1980’s alone. The last half decade of 1980’s saw yet another sharp increases in the number of claims filed. It is roughly estimated that about 45.000 cases were filed during the above periods.

Waves of new claim filings continue up until the time this book is written. Up to this time it is estimated that asbestos related claims in the USA alone could eventually reach as high as US$ 65 billion, with about one third of those losses have become the largest single cause of loss to the insurance industry.

There are a numbers of factors and issues that have made asbestos losses uncontrollable to the insurance industry

First, in hindsight it was the insurance industry’s mistake to provide such wide cover for a complex class that was beyond their proper knowledge at that time. The potential exposure in fairness was unknown, because at the time of writing the business, the exposure to asbestos related ilnesses had not surfaced.

Secondly it was because the insurance products itself became vulnerable to interpretation beyond the original intention of the coverage. An example of this was the fact that earlier asbestos related claims were mostly filed under the products section of commercial policies, which normally set a limit on such coverage. But as major asbestos manufacturer saw their products liability exhausted, they began filing new claims under “premises and operation” policies that had no aggregate limit (ceiling) on liability, and so it could be tapped on and on, repeteadly

The third was and is very much due to the culture and practice of the legal system that exists in a country such as the USA. For a period that began during the middle of the 1990’s there was a relatively ‘quiet’ period in that the number of new asbestos claims being filed had reduced significantly and many observers began to believe that the worst was over. It could be argued that this was a reasonable supposition, in that billions of dollars already been spent to settle thousands of claims, and by them many asbestos producers had also already declared bankruptcy and gone out of business. Many had already fallen ill had died many of the survivors had been compensated

However by 1999 a number of interesting and inter related factors spurred a whole new wave of litigation. Since so many companies directly implicated in the production of asbestos were no longer in existence to sue, lawyers began to targeting companies indirectly linked to asbestos production - i.e those that used the materials rather than manufactured the product had suddenly become a new target.

A trend with an even greater impact was the expansion of ligitations on claims made by people with little or no current liability - a condition characterized as nonmalignant. It was estimated that close to 95 % of approximately 60.000 claims filed in the year 2000 were categorized as being nonmalignant.