Are Asbestos Claims Declining?

There are indications that asbestos litigation reached a high-water mark, and that the courts should be seeing fewer of these lawsuits as time goes on. Still, it is estimated that asbestos claims will ultimately reach $200 billion before it is over, which may not be for decades, since the latency period for asbestos diseases can be anywhere from 20 to 50 years.

In a report released in 2006 by the actuarial consulting firm of Tillinghast, Towers and Perrin, asbestos liability on the part of corporations and their insurers had fallen in the three-year period between 2002, when such liability totaled $12.4 billion, and 2005, when claims came to $7 billion. The cumulative figure of $200 billion was based on Tillinghast figures. According to Tillinghast, insurance companies will eventually be responsible for over 60% of this amount, while the remaining 40% will be paid by corporations that have exhausted their coverage.

One of the reasons given for the decline in asbestos litigation was the tort reform passed by many states. Fraudulent claims, such as those that grow out of mass screenings (”Million Dollar Lungs!”) have become easier to identify as well.

Part of what had fuelled the explosion of asbestos litigation from around 1998 onward were concerns over whether or not plaintiffs would be able to collect damages. Because asbestos use was so widespread throughout so many industries, virtually any company could be named as a defendant, including contractors and asbestos dealers as well as those that simply used asbestos products in their operations. As a result, over 70 companies have gone bankrupt over the past 30 years.

As plaintiffs and their lawyers realized that funds might soon run out, many filed suit. According to the Insurance Information Institute, 90% of current claimants do not currently exhibit signs of respiratory disease, but have suffered asbestos exposure at some point during their lives. Their reason for filing is to get compensation while funds are still available.

Sources

Insurance Information Institute. “Asbestos Liability”. June 2007. http://www.iii.org/media/hottopics/insurance/asbestos/

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