Alliance: Allstate Move Illustrates Asbestos Impact
By Daniel Hays
NU Online News Service, Nov. 14, 1:56 p.m. EST?A insurer group attorney who is recommending a variety of actions to foster asbestos litigation reform said today that a $32 million asbestos case settlement by Allstate is a demonstration of the size and effect of the issue.
Kenneth D. Schloman, Washington counsel for the Alliance of American Insurers, made his comments in response to a question about the Northbrook, Ill.-based insurer’s announcement yesterday. The company said that its revised income statement reflecting the settlement put third quarter profit at $248 million or 35 cents a share, down from the 39 cents a share it reported last month.
Allstate’s action and previously reported asbestos settlements by other insurers “show the extent of the problem. These charges for things there were no reserves for, or companies were underreserved for, indicates a significant problem that has to be addressed,” said Mr. Schloman.
On Tuesday, speaking on the asbestos topic at the sixth annual Cambridge Reinsurance Symposium in Philadelphia, he said reform advocates have a tremendous opportunity to make advances in many different arenas.
“Federal legislation will be introduced that, while not as comprehensive as past efforts, would move reform forward. This is an opportunity that the business community must pursue,” Mr. Schloman said.
He urged that reformers better coordinate the development of a legislative, political and/or strategic defense.
“The business and insurance communities cannot afford to limit themselves to one particular effort to reform the asbestos litigation system. We have to look not only at a federal solution, but also at opportunities in problem states and the courts,” he said.
He noted that the volume of asbestos-related litigation is on the rise, and the cost of such claims has forced about 30 U.S. companies into bankruptcy, while several actuarial firms have put ultimate asbestos costs for the U.S. insurance industry at a range of $55 billion-to-$70 billion.
Mr. Schloman cited figures giving total costs for the U.S. economy, including costs borne by non-U.S. reinsurers and uninsured amounts, at an estimated $200 billion-to-$275 billion.
Mr. Schloman said today that the industry, in its litigation reform effort, must “look at all avenues, whether it’s a federal asbestos-specific bill, some tort reform, the impact on litigation and some tort reforms in states.”
He said that “the courts themselves can make changes if they are given the right opportunity to look at cases that go up on appeal.”
The Alliance, based in Downers Grove, Ill., noted that asbestos, a naturally occurring substance, was once looked on as a “miracle mineral” with a versatility that led to its use as a component in numerous parts. As examples, he cited building materials such as insulation, roofing and flooring, brake and boiler linings, wire insulation, gaskets and shipbuilding–especially during World War II.