The Next Asbestos Bonnie Boccitto, FCAS, CPCU, MAAA Chief Underwriting Officer Munich-American...

The Next Asbestos

Bonnie Boccitto, FCAS, CPCU, MAAAChief Underwriting Officer

Munich-American RiskParnters is a division of American Re-Insurance Company

The Next Asbestos

Why has asbestos proven to be so difficult to quantify?

On the horizonElectromagnetic FieldsSilicaPharmaceuticals


Asbestos Characteristics of the product

Large number of people affected

Large number of defendants

Disease manifests after a long period of time

Non-reversible, fatal effect

Use of court system (tort) rather than WC


Asbestos Characteristics of a Legal Environment

Evidence of concealed knowledge

Continuous exposure theory

Class action suits

Bankruptcies

“Fear of” claims


Asbestos Litigation1940’s Exposure in ship building industry during WW II1950’s – 60’sExposure at construction sites1973 Asbestos claims began1981 Judge Brazelon declares continuous exposure

theory1982 16,000 claims against Mansville/ Mansville

declares bankruptcyLate 1980’s Class action suits beginEarly 1990’s Pleural plaque (unimpaired) claimsMid 1990’s Defendants offered $1.2 billion settlement

agreement with no value for future pleural plaque claims

2000 30,000 New Claims2002 90,000 New Claims2003 100,000 New Claims


Asbestos: Current Status

Federal asbestos trust fund discussions delayed

Rand estimates 730,000 total claims

Estimate 200,000 claims still pending

Milliman projects that the total cost of settlements will ultimately reach $265 billion

Asbestos defendants have grown from 300 in 1980’s to

8,400 today


Electromagnetic Fields (EMF’s)

U.K. group re-visiting worldwide studies to determine link between EMF’s and cancer.

Claims that exposure to electromagnetic fields cause reactions in the skin similar to the reaction to radioactive material.

Fourfold increase in tumors on the auditory nerve of those using analog cell phones over a period of 10 years



Study by EU members found breaks in individual strands of DNA

NYC Council is considering a long-term study of cell-phone base stations

A 23-year study concluded that there is no established link between the broadcast antennas and brain and nervous systems cancers



Affects large number of people Potential latent effects Utilities as defendants would be unattractive. Could

other defendants be found? Cell phone manufacturers would be attractive

defendants Seriousness of affect Could affect WC and tort system Class action suits definitely possible “Fear of” claims definitely possible


Silica Silica comes from sand and gravel with a high

concentration of silicon dioxide and is found in concrete powder, glass, detergents, and ceramics.

Silica causes silicosis, pulmonary fibrosis, and allergic bronchopulmonary aspergillosis

Year Silica Cases 1975 – 2001 200 2002 3,500 2003 22,000


SilicaMulti-Defendant Suits

Multi-Defendant Claims California: 50 defendants

Philadelphia: 15 co-defendants

Florida: 8 defendants

Washington state: 60 potential defendants

Alabama court dismissed a complaint against 75 defendants for lack of specifics tying the defendants together.


SilicaClass Action

Estimates suggest 480,000 former miners with silicosis in South Africa.

Miners in Ontario

10,000 claimants in Federal Court in Texas in 2006.

New Jersey silica plaintiffs were unsuccessful in a recent attempt to have the silica litigation designated as a mass tort.

California “class action” dismissedMunich-American RiskParnters is a division of American Re-Insurance Company

Silica“Fear of” Claims

Sandblaster who was diagnosed with silicosis but was never disabled, may still receive an award of medical benefits from his former employer.

Ohio considering bills to block “fear of” claims


Silica

Federal Settlement

Lawyers moving to silica claims if asbestos litigation is not found satisfactory

Some talk that silica to be part of the $140 billion privately financed, privately administered asbestos trust fund


Silica

Large number of people effected Large number of defendantsDisease manifests after a long period of time Non-reversible, fatal effect (but preventable)Use of court system (tort) rather than WC “Fear of” claimsClass actionsprivately funded federally administered settlement International in scope


PharmaceuticalManufacturers

PfizerMerckNovartisLillyWyethJ & J


Pharmaceuticals

Large Number of Claimants

A U.S. Government study reported that more than 40% of Americans take at least one prescription drug and one in six take at least three.


Pharmaceuticals

Large number of defendants

Manufacturers

Doctors

Pharmacists

Managed care organizations


Pharmaceuticals

Class Action

BMS, manufacturer of the drug Serzone, agrees to settle class action involving over 2,000 plaintiffs

States enter litigationPurdue Pharma, manufacturer of OxyContin, has

settled with the Attorneys General of West Virginia and Florida on claims that the company misrepresented the additive nature of the drug, creating a public nuisance and violating state deceptive trade practices.


Pharmaceuticals

Latent Effects

Personal Injury, Property Damage or Advertising Liability shall be determined under the Policy in effect on the date in the Annual Period when Notice of Integrated Occurrence is first given


Pharmaceuticals

Large number of people affected Large number of defendantsDisease manifests after a long period of time Non-reversible, fatal affectUse of court system (tort) rather than WC “Fear of” claimsClass actionsprivately funded, federally administered settlement International in scope


Thank you for your interest.

This material is being provided to you for information only, and is not permitted to befurther distributed without the express written permission of American Re. This material is not intended to be legal, underwriting, financial or any other type of professional advice. "© Copyright 2005 American Re-Insurance Company. All rights reserved. The AmericanRe and Munich-American RiskPartners names and logo are registered marks owned byAmerican Re-Insurance Company.

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