Recent reports have trumpeted a sharp drop in asbestos litigation, but attorneys and insurers say the asbestos battle is still on – for insurance companies, asbestos litigation is still a costly threat that will stick around for about the next 40 years.
Clogged asbestos litigation dockets across the country got a massive cleaning-out in the past couple years, but active cases continue to cost companies millions or billions of dollars, and still lead to insurer bankruptcies.
“We’re in active warfare right now,” said Lawrence Cetrulo, an attorney who serves as the court-appointed defendant liaison counsel for Massachusetts asbestos litigation. “The hard times are not over.”
The state gets 200 to 300 new asbestos-related court cases a year, Cetrulo said. Because of the nature of asbestos-related illnesses, it can take up to 50 years for symptoms to surface, meaning such cases will co tinue to crop up for years.
Asbestos lawsuits affect a broad range of insurers, Cetrulo said, and a few major players are still notably embattled.
Still On The Battlefield
The Travelers Cos., for example, noted in its third-quarter public filings that in August $449 million in company money was released from escrow to settle with former insurance customer ACandS, which installed insulation with asbestos in it from the 1950s to the ’70s.
Travelers has noted $577 million in net asbestos-related payouts so far this year, and keeps a reserve of more than $3 billion for asbestos claims.
As steep as those costs are, recent reports on asbestos say such claims and lawsuits have dropped off considerably. Both consulting firm Tillinghast-Towers Perrin and ratings firm A.M. Best noted the asbestos liability payouts saw a big decrease after recent peaks in 2005.
Tillinghast’s 2008 report showed asbestos liability costs were only $1.9 billion in 2006 in the U.S. tort system – down from $7.3 billion in 2005.
“Starting around 2005, really there’s been a number of factors that lead to a kind of moderating of costs related to asbestos,” said Claire Wilkinson of the Insurance Information Institute.
Previously, thousands of plaintiffs who joined class-action lawsuits had no symptoms of asbestos-related illness; these health problems can take decades to surface, so plaintiffs pre-emptively filed lawsuits.
The Insurance Information Institute said some states afterward refused to allow lawsuits from plaintiffs without symptoms. In Massachusetts and several other states, such cases were placed on inactive dockets, where they still sit.
Edwin L. Wallace of Boston-based law firm Thornton & Naumes represents asbestos plaintiffs, and he said those cases will become active if the plaintiffs develop symptoms. About 3,000 new cases of mesothelioma, an asbestos-related cancer, are diagnosed each year, he said, and mesothelioma is always fatal.
Because it takes about three years to go through each case, Wallace estimated about a thousand asbestos-related cases were on the active docket in Massachusetts.
Long-Term Litigation
The Travelers filing – and analysts such as Tillinghast principal Jenni Biggs -noted that many of the original asbestos defendants have filed for bankruptcy, leaving them a poor source of compensation for injured workers. That led plaintiffs’ attorneys to file suit against other, more peripherally asbestos-related companies, in the hope of getting their clients some compensation. Those newer defendants – and their insurers – were only obliquely related to the manufacture and installation of asbestos, so they never expected to get sued. And now, that’s costing them.
But although asbestos-related bankruptcies are relatively rare in the insurance industry, they still happen – Tillinghast’s study on the subject showed that two companies went bankrupt last year, although the report doesn’t specify the companies’ names. In 2002, the peak year for recent bankruptcies, 13 companies filed for financial protection.
And the threat will linger, Tillinghast reported: “Companies must still plan for more than a 40-year horizon for ultimate resolution of their asbestos liabilities, during which they may receive tens of thousands of new claims.”
