Oct. 19 (Reuters)—Travelers Cos is the latest large insurance company to say the asbestos problem, which the industry was supposed to have put behind it long ago, has not gone away and may be getting worse.

Travelers put 25 percent more into its asbestos claim reserves this year than it did last year, the company said on Wednesday, citing more litigation and more severe payouts because of those lawsuits.

“While the Company believes that over the past several years there has been a reduction in the volatility associated with the Company's overall asbestos exposure, there nonetheless remains a high degree of uncertainty with respect to future exposure from asbestos claims,” it said in its quarterly report to securities regulators.

Travelers follows both AIG and Hartford Financial, which surprised investors with substantial reserve increases earlier this year, amid increased losses and a litigation experience similar to Travelers.

In addition to the reserve increases, MetLife said in August it saw asbestos-related claims rise 11 percent in the first half of the year after dropping steadily from 2003 through 2010.

Even as claims rise, doctors say the actual incidence of asbestos-linked diseases like the lung cancer mesothelioma is on the decline. Doctors are being more aggressive in treating the cases that do pop up, though, which also contributes to elevated costs for insurers.

Asbestos, popular at one time as an insulating material, is now known to cause severe lung diseases. Litigants have claimed that insurers like MetLife knew as early as the 1920s that asbestos was harmful, claims the insurers have denied.

A number of insurers, including Lloyd's of London, were driven to the brink of collapse by asbestos claims. Though the material's widespread use ended in the 1970s, illnesses routinely take 30 years or more to develop after exposure.

Many insurers took steps early in the 2000s to increase their reserves and otherwise insulate themselves from risk, assuming that claims would have declined or gone away entirely by now.

Yet ratings agency A.M. Best has said it expects the industry to ultimately face $75 billion in exposure to asbestos claims, and it has argued that some companies are still not fully reserved for claims they may experience.

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