Equitas Slams Lawyer 'Greed' On Asbestos
London Editor
London
An Equitas executive railed against the greed of the plaintiffs bar during a speech here last week where he discussed the recent rapid growth in asbestos claims that he warned could lead to insurer insolvencies.
Although asbestos has not been in widespread use for more than 25 years, "the number of asbestos claims filed in the United States has risen at an unprecedented rate in the last two years," said Paul Jardine, commutations director and chief actuary for Equitas during a presentation at a conference of the London-based Association of Lloyds Members.
He predicted that if the current level of asbestos claims continues unabated, within possibly the next six months some companies could face financial collapse. He was referring to both U.S. and London market insurers as well as U.S. asbestos producers and other manufacturers.
He reassured his listeners that Equitas is very conservatively reserved for asbestos and could keep going indefinitely at the current claims levels. Equitas was set up to reinsure and run off pre-1993 non-life liabilities of Lloyd's of London syndicates.
Mr. Jardine referred to the seemingly "unquenchable" thirst of the plaintiffs bar to continue filing cases, many of which, he said, have no medical basis.
"Plaintiffs attorneys are reaching further and further to generate cases, and most cases being filed today simply involve no medically discernable impairment," he said. "Defendants have been enticed or coerced into agreeing to the so-called inventory deal, which settleslarge numbers of claims involving both impaired and unimpaired lives."
Part of the reason that claims are increasing is that more and more asbestos manufacturers are filing for Chapter 11 bankruptcy protection, he said, noting that at least five companies over the last 18 months have made such filings.
In addition, U.S. Gypsum recently "issued a statement indicating it could file for bankruptcy soon. We expect there to be further major U.S. insolvencies in the coming months," he said.
"The impact of bankruptcies has been to shift claims away from the insolvent companies and towards other solvent producers–not to mention to produce outrageous settlement demands from plaintiff attorneys who now control bankrupt estates," Mr. Jardine emphasized.
"The literal meaning of the word [asbestos] in ancient Greek is inextinguishable or unquenchable," he noted, wryly.
"As a company we have no problem with the concept of asbestos defendants–and, in turn, their insurers–paying adequate compensation to seriously impaired people, and mesothelioma as a condition is the most horrible form of cancer," he said.
Mr. Jardine said the time for definitive action has now arrived as insurers must grapple with the escalating costs of asbestos claims–perhaps up to 85 percent of which are from unimpaired plaintiffs.
He said the preponderance of inventory deals is escalating claims figures. Mr. Jardine said these deals cause "seriously impaired lives" to be "massively undercompensated," while the "unimpaired majority are massively over-compensated."
Further, he said, with producer bankruptcies leading plaintiffs attorneys to make "outrageous settlement demands," the result has been that over the past 18 months, Equitas and other London market companies have reexamined "the whole way in which asbestos claims are handled."
This review led directly to a recent decision to require stricter documentation requirements for all U.S. asbestos policyholders, effective June 1. (See NU, May 14, page 1.)
"The documentation requirements are designed to reimburse only those asbestos bodily injury claims that are supported by adequate medical evidence of a claimants injury and identification of the defendants product responsible for that injury," he said.
These requirements signal a heightened scrutiny of asbestos claims settlements by London market insurers, "as well as an unwillingness to support payments to claimants who are not injured," Mr. Jardine said.
Reproduced from National Underwriter Edition, June 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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