Recent actuarial assumptions indicate that asbestos reserves generally should be reevaluated given the unexpected resilience of claim filings.
For decades, the conventional wisdom has been that mesothelioma diagnoses would begin to decline because of laws severely limiting the use of asbestos in the mid-1980’s and the aging of the pool of potentially exposed individuals. Recent projections suggest that the conventional wisdom is wrong.
The American Cancer Society estimates that there are approximately only 3,000 new mesothelioma diagnoses a year. And, mesothelioma lawsuit filings are essentially stable and not increasing. Undoubtedly, one of reasons contributing to the stability of mesothelioma filings is the widespread advertising by the plaintiffs’ bar, resulting in an increase of the percentage of plaintiffs that file suit after diagnosis.
The bottom line for corporate defendants is not the number of lawsuits filed against it, but the overall cost corporations and their insurers expend for defense and indemnity. Long-time asbestos defendants had great success a decade ago reducing the number of total asbestos lawsuits pending against them as various jurisdictions such as Mississippi aggressively sought to purge their dockets of “asbestosis” claims that did not allege mesothelioma or lung cancer. Defendants’ claims totals dropped dramatically, some by as much as 90%. However, the plaintiffs’ bar responded by focusing more intently on their mesothelioma and lung cancer cases, and began to take more cases to trial and/or to demand and receive higher settlement amounts for these claims. Overall, it appears that the total dollar amounts expended by defendants and their insurers continues to generally climb on a per annum basis.
It appears that this dynamic or whatever other variables are driving the increase is here to stay for the time being, and the conventional wisdom has been abandoned by those whose job it is to closely monitor these trends. Actuaries at Willis Towers Watson and A.M. Best recently issued reports that mesothelioma cases may increase in the future, and indicated that insurance reserves for asbestos generally should be raised. These projections should be closely considered by defendants and incorporated into their strategies. If you desire more information about this topic, please email Steve Hoke at firstname.lastname@example.org or he can be reached at 312-575-8576.