The ultimate asbestos loss for the property and casualty insurance industry is now estimated to be $85 billion, an increase of $10 billion from A.M. Best's estimate three years ago.
The ratings agency says the industry continues to incur about $2 billion in losses per year and pays out about $2.5 billion, with no end in sight. A.M. Best says total funding for asbestos losses has reached $74 billion and “it is clear that the asbestos problem will persist for many years to come.”
Environmental losses remain unchanged from previous estimates at $42 billion, making ultimate industry losses from asbestos and environmental (A&E) $127 billion.
A.M. Best says that after a period of tort reform in the 2000s, asbestos losses tapered off from a high of $8 billion in a year in 2002 to slightly more than $1 billion in 2008.
Success from the plaintiff’s bar to erode some reforms and higher judgments for more serious cases involving mesothelioma remain a “worrisome trend,” says A.M. Best.
Because of the “long latency period” of mesothelioma and the high exposure rate over many years, “it is likely that asbestos losses will continue to develop for many years to come.”
A.M. Best notes that A&E losses declined by 30 percent in 2011 after a 50 percent increase in 2010 and 2009. The average loss level over the past five years remains half of what it was for the previous five years, says Best.