TopicsReemergenceAsbestos

The Reemergence

of Asbestos

More Claims, More Defendants,

More Dollars









Charles Kingdollar Just when insurers thought that there surrounding the impact of asbestos on

is a Vice President in the

was a light at the end of the tunnel, a the property/casualty insurance indus-

Underwriting Services Division

of GeneralCologne Re. disturbing sight looms in the rear view try, including:

With the company for over mirror - a new wave of asbestos claims. I the types of products and businesses

22 years, Mr. Kingdollar is the

The sighting is confirmed by asbestos that still have possible asbestos

Line of Business underwriter

for Environmental Impairment producers, insurers, and industry analysts exposures;

Liability reinsurance. In addi- alike who, while they may diverge on I recent litigation against manufactur-

tion to his line of business

some specifics, agree on these findings: ers and distributors of asbestos as well

functions, his job responsibili-

ties include reviewing and more asbestos claims are being filed as against the new peripheral defen-

tracking the potential impact against a growing number of peripheral dants;

of environmental and toxic

defendants, including many claims by I new estimates of asbestos liabilities

tort issues on the property/

casualty insurance and rein- individuals without demonstrable dis- facing property/casualty insurers; and

surance industry, including ease. They also agree that the claim I the importance of reviewing asbestos

review of litigation, regula-

surge will cost the insurance industry exclusions.

tion, and scientific develop-

ments. much more than it had anticipated for

asbestos losses. Recent U.S. Developments

This latest claim wave has underwriting I New studies warning that previous

and financial implications for insurance estimates of insurers’ potential

companies worldwide. In this article, we asbestos liabilities appear to have

discuss the trends and recent findings been dramatically underestimated;









Topics 10 37

I Asbestos claimants filing suits against I The French Court of Cassation, the expected to report a net loss of about

peripheral defendants who manufac- country’s high court, has held that 870 million euros (US$777 million)

tured products containing as little as employers are responsible for the for 2001 because of asbestos claims

1% asbestos; asbestos-related diseases and must stemming from recently acquired U.S.

I Ever larger asbestos personal injury compensate former employees suffer- subsidiaries;4

awards; ing from asbestos-related diseases. I A United Kingdom Court of Appeal

I Efforts by insureds to reclassify The ruling reportedly could cost decision finds that asbestos personal

asbestos personal injury claims as French liability insurers FFr 50 billion injury cases with more than one de-

premises claims; (US$ 6.68 billion) over the next fendant must be dismissed since plain-

I Judicial decisions expanding the twenty years as it paves the way for tiffs cannot prove which defendant is

rights of plaintiffs to reopen previ- thousands of asbestos claims from responsible for exposing them to the

Asbestos is a mate- ously settled asbestos claims. former workers and from families of asbestos fiber that caused cancer.5

rial with nearly former employees who have died as

universal proper- These developments, combined with the

Recent International a result of asbestos-related diseases;1

ties: it is acid and fact that products containing asbestos

Developments I The United Kingdom’s High Court

lye resistant and are still manufactured and used around

Crocidolite, very good I Larger awards achieved by asbestos allows thousands of South African

fireproof. It is the world, illustrate the need for insurers

acid-resistance plaintiffs outside of the United States; asbestos plaintiffs to file suits against

extracted by open- to revisit the language and use of as-

I New studies estimate past exposures a British mining company in UK

cast mining. The bestos exclusions.

to asbestos will result in some courts;2

greatest reserves I Courts in the United Kingdom and

250,000 deaths in Western Europe Current Asbestos Uses May

are found in Ireland award damages to asympto-

over the next 35 years; Expose New Policies

Canada, Russia, matic asbestos plaintiffs in “fear of

I New studies conclude asbestos-re-

South Africa and asbestos” cases;3 Many believe that the use of asbestos

lated deaths in the United Kingdom

Australia. I An Austrian fireproofing materials was banned in the United States years

could increase from 3,000 annually

manufacturer facing thousands of ago and that current exposures are lim-

in 1998 to 10,000 annually by 2020;

Chrysotile, very good asbestos personal injury claims, is ited to old buildings with asbestos-

alkaline-resistance









Si









38 GeneralCologne Re

containing materials. Unfortunately, this As for old products with asbestos, a re-

is not so. In July 1989, the Environmental cent Tillinghast study7 includes a list that

Protection Agency (EPA) did ban the includes some items still in use or found

manufacture, importation, processing, in a variety of commercial settings.

or selling of almost all products con- Office, industrial, municipal, and school

taining asbestos. The ban was to be buildings are probably the largest source

implemented over a nine-year period. In of asbestos-containing products. Floor

October 1991, however, a federal appel- and ceiling tiles, insulation, pipe cover-

late court overturned much of the ban.6 ing, and wallboards with asbestos are

The ban survived for only six asbestos- still in place in countless structures.

containing product categories. At that Once asbestos is friable, employees of

time, the EPA reportedly asked the building lessees, contractors, hired

Department of Justice to appeal that janitorial services, and even students

decision to the U.S. Supreme Court, but can all be exposed. Add to this list the

the Justice Department declined. Hence, employees working with gaskets, boiler

while there has been a drastic reduction insulation, and brake linings.

in the use of asbestos in the U.S., all

Another old product resulting in recent

asbestos and asbestos-containing prod-

litigation is asbestos-containing home

ucts are not currently banned.

insulation products. Homeowners in

Other countries have only recently tens of thousands of American homes

banned the use of asbestos. France did may be exposed to asbestos from Zono-

not completely ban the use of asbestos lite insulation lining attics, roofs, and

until 1997. Chile and Saudi Arabia only crawl spaces. Several class action suits

banned the use of asbestos in 2001. have already been filed on behalf of

Argentina began banning certain types thousands of homeowners.

of asbestos in 2000 but will continue to

More surprising is that some of these

allow the import and some use of

and other products are still made or sold

chrysotile asbestos. A complete ban is

with asbestos, however small the

slated to take affect in January 2003. The

amounts. According to the U.S. Geologi-

European Commission finally banned

cal Survey, the primary uses of asbestos

white asbestos, but the ban doesn’t take

in the year 2000 included roofing pro-

affect until 2005. White asbestos was the

ducts, gaskets, and friction products.

only type that was still allowed for use in

A February 2000 article appearing in

European Union member countries and

the Seattle Post-Intelligencer stated that

it was widely used in buildings through

there are over 3,000 asbestos-containing Asbestos clean-up was even

1999.

products sold in the U.S., including required at the world-

famous Goetheanum

The fact that asbestos is still in produc- pipes, construction materials, floor tiles,

founded by Rudolf Steiner

tion and used at all is an important abrasives, and automotive and aircraft in Dornach near Basel/

realization. Asbestos is not just an “old brake linings.8 Switzerland.

business” problem; lest it unexpectedly

Consider automobile brake linings, a

infect their current book of business,

product spanning the old and new

insurers need to consider how and

product lists. According to a Seattle Post-

where asbestos is found today.

Intelligencer article, General Motors re-

Asbestos risks still continue in two forms: portedly still used asbestos brake linings Public facilities such as grand- The biggest university campus

the handling of old products containing in three models produced in 2000.9 stands and horse racing tracks in Paris, France, with 50,000

asbestos and the production of new A larger number of smaller companies are closed if the asbestos concen- students and staff was closed

tration exceeds permissible limits. in 1995 for asbestos clean-up.

products containing some amount of still use asbestos while manufacturing

the hazardous substance. Several studies replacement brakes or rebuilding brakes.

and news reports shed some light on According to the Post-Intelligencer,

these products and the businesses most “hundreds of different styles of replace-

prone to exposure. ment brakes” continue to contain









40 GeneralCologne Re Topics 10 41

A protective mask

must be worn by

workers when

asbestos fiber is

woven into fabric.

The evil witch in the

movie “The Wizard

of Oz” (1939),

on the other hand,

rode entirely unpro-

tected on a broom

with an asbestos

handle.









asbestos. Automobile mechanics at small While we have focused on asbestos- asbestos manufacturers. At least 45 According to a Wall Street Journal article,

auto and brake repair shops across the containing products manufactured in asbestos defendant firms have entered the number of asbestos defendants has

country represent the largest group of the U.S., asbestos is still widely used bankruptcy - nine since January 1, 2000 increased from approximately 300 in the

exposed workers. Asbestos released into around the world, not only for products - and a few of them were originally con- early 1980s to over 2,400 companies by

the air can reportedly linger long after similar to those discussed above, but sidered “peripheral” to the earlier as- 2000.10 Some of the peripheral defen-

a brake job is done. Since asbestos can in many countries asbestos may still bestos cases. Smaller and less culpable dants cited in this article include:

spread 75 feet from the work area, it can be used for fireproofing in buildings. parties are now the only financially vi- Allwood Door Co., Ford Motor Co.,

be inhaled by everyone inside a garage, The chart below contains data regarding able defendants. The recent acceleration General Motors Co., General Electric Co.,

including customers, and carried home asbestos production from the U.S. of producer bankruptcies has translated Home Depot, Campbell Soup Co.,

on work clothing. The federal govern- Geological Survey’s Website to the surge of claims naming peripheral Colgate-Palmolive Co., E.J. Gallo

ment has not issued warnings to the (http://minerals.usgs.gov/minerals/pubs defendants not previously sued or Winery, Gerber Products Co., Alcoa Inc.,

nation’s 750,000 brake mechanics even /comodity/asbestos/070301.pdf). viewed as asbestos risks. DuPont Co., Lockheed Martin Corp.,

though the EPA stated in 1993 that

unless asbestos was also removed from New Asbestos Defendants

replacement brakes, “deaths from In U.S. Litigation

In the Middle Ages oil lamps

asbestos-related diseases 20 or 30 years For many insurers, the seeds of concern

often contained an asbestos down the road will be counted in the Country 1999 Production* 2000 Production* Reserves

about new business were planted when

wick. tens of thousands.” more companies were sued for asbestos

United States 7 5 Moderate

As these reports and investigations were injuries. These “peripheral” or nontradi-

issued and conducted in 2000, it is tional defendants did not mine, manu- Brazil 170 170 Moderate

possible that asbestos is no longer used facture, or process asbestos. Rather, they Canada 337 335 Large

or found in these products, or that expo- are the companies that made, used,

China 300 300 Large

sures have declined in the workplace sold, or serviced products containing

Kazakhstan 125 125 Large

There were famous men who since their completion. The EPA is asbestos, like building product manufac-

withstood the heat of a fiery expected to continue its studies and turers, construction contractors, and Russia 700 700 Large

furnace. They probably wore

release more current findings in the near automotive parts manufacturers. South Africa 20 20 Moderate

protective clothing made of

asbestos. future. These nontraditional defendants might Zimbabwe 135 130 Moderate

not be main litigation targets were it not Other countries 136 114 Large

for the bankruptcy of so many major

* Production data in 1,000 metric tons









42 GeneralCologne Re Topics 10 43

The microscopic

asbestos fibers are

spread to all parts

of a building by

ventilation systems

and are thus

inhaled by humans.









AT&T Corp., and Dow Jones & Co. Significant Verdicts and The plaintiff alleged that he was ex- trical tape, contained asbestos and I In May 2000, an Illinois jury ordered

Certainly, many if not all of these firms Settlements Against Peripheral posed to asbestos in joint compound caused his injuries. Sears was origi- Shell Oil to pay a former roofer with

do not fit the description of traditional Defendants in the U.S. and wall texture products manufac- nally the only defendant in this case mesothelioma $ 34.1 million. The

asbestos defendants. It has been suggested that the size of tured by Kelly Moore Paint Co. while but the retailer successfully added roofer was hired by the oil company

asbestos awards against peripheral de- working as a contractor. The verdict General Electric, as manufacturer of and worked at Shell facilities between

Gasket manufacturers and package

fendants will likely be lower than the was comprised of $ 40 million in the electrical tape, to the verdict form. 1956 and 1966 and alleged his meso-

products manufacturers have seen a

large awards juries have directed against compensatory damages and The jury found Sears liable for 2 % of thelioma was caused by exposure to

dramatic increase in asbestos personal

the manufacturers and distributors of $ 15.5 million in punitive damages.12 the award ($ 30,000) and General asbestos contained in roofing materi-

injury claims. Hospitals and universities

I In August 2001, a Texas jury ordered Electric responsible for the remainder. als on buildings owned by Shell.16

that had asbestos-containing ceiling tiles asbestos. Recent litigation against some

peripheral asbestos defendants, how- North American Refractories (NARCO) According to the plaintiff’s counsel,

or insulation have also been named as These verdicts are the tip of the iceberg

ever, seems to indicate that juries are just to pay a mesothelioma plaintiff this was the first asbestos verdict

defendants in asbestos lawsuits, as have of claims filed against peripheral defen-

as willing to punish them with substan- $ 6.1 million. The plaintiff alleged that against a retailer of products contain-

banks that financed properties contain- dants awaiting trial or settlement. The

tial verdicts. For example: while working as a pipefitter from ing asbestos.14

ing asbestos. Oil refineries, retail, auto variety of their business activities illus-

1956 to 1973, he was repeatedly I In August 2000, Texas juries, in two

parts manufacturers, textile manufac- I In October 2001, a California jury trates just how far the asbestos liability

awarded a plaintiff with mesothe- exposed to a NARCO product, called separate trials, ordered Tyler Pipe

turers, and other classes of business may chain extends. Also troubling is the rela-

lioma $ 4.2 million.11 The plaintiff al- Narcocast, containing one percent Industries, a subsidiary of Swan Trans-

also find themselves defendants in asbes- tively small exposure to asbestos experi-

leged his illness was caused by work- chrysotile asbestos. The jury found portation Co., to pay 15 asbestos

tos personal injury litigation. In some enced by some plaintiffs in these cases.

ing with asbestos-containing gaskets NARCO negligent for producing an plaintiffs $ 26 million. In one case,

cases, the litigation has been filed by A much larger number of new claim

manufactured by the defendant, Flexi- unreasonably dangerous product the jury awarded seven plaintiffs

workers exposed to asbestos during pro- filings against peripheral defendants

talic. The defendant argued that its without a warning.13 $ 17 million. In the other, the com-

duction; in other cases, it was filed by do not allege actual disease. As a result,

I In September 2000, a New York jury pany was ordered to pay eight plain-

contractors or employees who worked products emitted only background insurers may find that companies first

levels of asbestos. ordered Sears, Roebuck & Co. and tiffs $ 9 million. Tyler Pipe used equip-

on the premises where asbestos was perceived as remote asbestos risks are

I In August 2001, a Texas jury ordered

General Electric to pay a mesothe- ment to transport molten metal to

used. anything but remote.

a paint manufacturer to pay a meso- lioma plaintiff $ 1.5 million. The plain- molds which were lined with cement Mobile emission assessment

tiff alleged that products purchased containing asbestos.15 systems are used in public

thelioma plaintiff $ 55.5 million. This schools, for example, to

award is believed to be the largest from Sears in 1950, including floor determine whether the con-

single plaintiff asbestos award to date. tiles, paper boiler insulation, and elec- centration of mineral fibers

poses a health threat to

students and teachers.









44 GeneralCologne Re Topics 10 45

Recent Large U.S. Awards As of September 30, 2001, a dozen com- U.S. juries also seem to be willing to

Against Traditional Asbestos panies were facing a total of 1,041,054 award plaintiffs suing traditional asbes-

Defendants pending asbestos personal injury claims. tos defendants ever larger sums of mon-

While we have discussed the impact of Halliburton, Viacom, Foster Wheeler, ey. While there are numerous examples

asbestos personal injury claims on new Kaiser Aluminum, and Metropolitan Life of juries awarding asbestos plaintiffs in

peripheral defendants, it is not our intent were all facing more than 100,000 excess of $ 1 million in damages, a few

to minimize the impact the continuing asbestos claims each.18 recent examples should suffice to illus-

flood of asbestos claims is having on trate this alarming trend.

According to Harris Martin Columns

more traditional asbestos defendants. Asbestos, several companies made large I In December 2001, an Illinois jury

These “traditional defendants” have asbestos-related payments during 2000, awarded a mesothelioma victim

generally been manufacturers and dis- including: $ 16 million.20 Defendant, AcandS

tributors of asbestos, but also include Fiberboard paid $920 million; (Armstrong Contracting & Supply),

some large contracting operations and Owens-Corning paid $685 million; argued its products were not respon-

users of asbestos materials. T&N paid $324 million; sible for the plaintiff’s injuries. The

In the United States, more than 75,000 Johns Manville paid $266 million; plaintiff worked as a fork lift operator

new asbestos personal injury claims Armstrong paid $227 million; at Owens-Illinois from 1967 to the

were filed during 2001, more than any USG paid $162 million; mid 1970s. The jury awarded $ 8 mil-

year since 1989. To date, some 575,000 Garlock paid $120 million; lion in compensatory damages,

people in the United States have filed Dresser paid $117 million; $ 7 million in punitive damages, and

asbestos personal injury claims. This W.R. Grace paid $89 million; $ 1 million to the plaintiff’s spouse.

DANA paid $78 million; I In December 2001, a Maryland jury

number may ultimately increase to

2.5 million U.S. claimants.17 Owens-Illinois paid $78 million; and awarded five mesothelioma victims

Foster Wheeler paid $56 million.19 over $ 40 million.21 Defendants









Waste containing asbestos

Clean-up workers Drainage layer

in asbestos- Drain pipe

contaminated Protective layer

buildings are Synthetic water-proof sheeting

exposed to high

health risks.

Asbestos residue is

transported to large Mineral impervious layer

waste sites for inter-

mediate storage.

Landfill formation

Geological barriers









46 GeneralCologne Re Topics 10 47

AcandS, A.P. Green and Habison, and tory damages with the jury denying $ 70 million were compensatory dam- damages and $ 6 million in punitive manufacturer. The jury found J-M A/C found that the defendants’ products

Walker argued that chrysotile asbestos the plaintiffs punitive damages. ages with the remaining $ 60 million damages. Pipe liable for half the award. were unreasonably dangerous.

could not have caused the plaintiffs’ AcandS was held liable for $ 83.75 assigned as punitive damages. Defen- I In May 2001, a Maryland jury ordered I In February 2001, a Texas jury or-

mesothelioma. Individual awards million; Dresser Industries, which was dants were Dresser Industries and AcandS Inc., to pay the families of dered Pfizer Inc., to pay an asbestosis Significant Legal Developments

spanned from $ 3.2 million to held partially liable to only two plain- North American Refractories Co. four deceased mesothelioma plaintiffs victim $ 18 million.27 The jury award- Outside of the United States

$ 15 million. tiffs, was to pay $ 21.25 million and I In August 2001, a Texas jury ordered and one living victim over $ 28 mil- ed $ 3 million in compensatory dam- We have begun to see some larger

I In October 2001, a Mississippi jury 3 M a dust mask manufacturer, was Owens-Illinois and Combustion Engi- lion.25 Plaintiffs alleged their illnesses ages and $ 15 million in punitive awards being obtained by asbestos per-

awarded six asbestos plaintiffs $ 150 held liable for $ 22.5 million. neering to pay the widow of a meso- were caused by working with the damages. The plaintiff alleged that he sonal injury plaintiffs outside of the

million.22 The plaintiffs all had asbes- I In September 2001, a Texas jury thelioma victim $ 11.1 million.24 The defendant’s asbestos-containing insu- was exposed to asbestos while work- United States. Although too soon to call

tos-related pleural disease but none awarded five plaintiffs $ 130 million.23 plaintiff had worked in an automobile lation. ing with an insulation product manu- this a trend, these may be indicators of a

had cancer or mesothelioma. The suit Two of the plaintiffs died of lung can- service station since the 1950s. The I In April 2001, a California jury or- factured by a Pfizer subsidiary. growing willingness to give significant

alleged that the plaintiffs were all ex- cer, one was diagnosed with colon suit alleged exposure to asbestos in dered a pipe manufacturer and as- I In February 2001, a Texas jury or- awards to those with asbestos-related

posed to asbestos while employed in cancer, and the other two were diag- automobile brake products. Several bestos manufacturer Johns-Manville dered Flexitalic Inc., and United States diseases in other countries. Some other

various jobs including working in nosed with asbestosis. All five alleged other defendants which manufac- to pay an asbestos plaintiff $ 20 mil- Gypsum Co. to pay 22 Texaco refin- rulings, although not involving large

shipyards, industrial boiler rooms, they were exposed to asbestos while tured friction brake parts settled be- lion.26 The plaintiff worked for a com- ery workers $ 35.2 million. Plaintiffs’ awards, are also noteworthy. A brief

and schools. Each plaintiff was working at a U.S. Pipe facility in fore trial. The plaintiff was awarded pany that shared space with J-M A/C exposure allegedly arose from use of discussion of some recent cases follows.

awarded $ 25 million in compensa- Alabama. Of the $ 130 million award, $ 5.1 million in compensatory Pipe Corp., an asbestos cement pipe the defendants products.28 The jury









Asbestos clean-up

is painstaking work

which requires

great attention

to detail.

The demolition of

large facilities such

as cooling towers

creates consider-

able air pollution

risks.









48 GeneralCologne Re Topics 10 49

The tiny asbestos

fibers are deposited

in every part of the

respiratory system,

ultimately becom-

ing lodged in the

lungs. By the time

the damage is

diagnosed effective

treatment is often

no longer possible.









I In January 2002, it was reported that obligation, especially with regard to employees of the rail operator have I In December 2001, it was reported that because asbestos plaintiffs could

a British widower whose spouse died sickness contracted by the employee been recognized as having asbestos- that a Western Australian mesothe- not prove which defendant was re-

of mesothelioma was awarded GBP due to products made or used by the related diseases.31 lioma victim was awarded sponsible for exposing them to the

95,000 (US $ 136,800). The widower company.” The ruling may pave the I In December 2001, a British mining $A 1,079,394 (US $ 553,733). The asbestos fiber that caused their meso-

sued WB Industrial Ltd., the corporate way for thousands of asbestos claims company, Cape PLC, settled a suit plaintiff worked for a building com- thelioma their claim against all defen-

successor to Darlington Chemical and from former workers and from fami- filed on behalf of some 7,500 South pany in the 1970s and often used dants must be rejected (Farichild v.

Insulation Co., alleging his wife was lies of former employees who have African miners diagnosed with as- power saws to cut through asbestos Waddington and Leeds City Council).

exposed to asbestos dust as a ten- died as a result of asbestos-related bestos-related diseases for US $ 30 mil- without any respiratory protection. A lower court judge had earlier ruled

year-old child when her aunt, who diseases. The previous French ruling, lion. The company operated asbestos The plaintiff filed suit against Amaca that there was no scientific means of

worked at Darlington Chemical, from 1898, had held that employees mines in South Africa from the late PTY Ltd. (formerly James Hardie), ascertaining the source of a single

picked her up from school after work would receive only limited compensa- 1800’s to 1979. Many of the 7,500 for- which supplied the asbestos. The suit asbestos fiber, or fibers, responsible

covered in asbestos dust.29 tion for occupational diseases.30 mer employees were hired as children alleged the company failed to provide for the malignant transformation of

I In February 2002, it was reported that I In March 2002, following the recent to work in the mines. Another 2,500 any warning along with the asbestos. the pleural cell. The Court of Appeal

the French Court of Cassation, the asbestos decision by the French high South Africans from the area, includ- The award, which is believed to be a upheld this judgement. This case may

Schematic depiction of a ing those living near the company’s record high award for a mesothelioma have huge implications for asbestos

human lung damaged by

country’s high court, held that court, it was reported that French rail

exposure to asbestos. employers are responsible for the operator, SNCF, has agreed to pay crushing mill in Prieska, South Africa plaintiff in Australia, was handed victims, manufacturers, and their in-

asbestos-related diseases of former Euros 30,000 (US $ 26,000) to the facility have also been diagnosed with down by the Supreme Court of surers as it may leave thousands of UK

employees and found 29 of 30 com- widows and between Euros 12,000 asbestos-related diseases. The suit Western Australia.33 citizens with asbestos-related diseases,

panies must compensate former (US $ 10,400) and Euros 15,245 was originally filed in 1997, and in I In December 2001, it was reported potentially from multiple sources,

employees suffering from asbestos- (US $ 13,200) to each child of former 1999, the British high court held that that the UK Court of Appeal dismissed without any compensation. There is a

related diseases. In its ruling the court employees who died of asbestos- the South Africans could sue the com- an asbestos suit which involved more previous Court of Appeal ruling in the

stated that “the employer has a safety related diseases. Over 800 former pany in British courts.32 than one defendant. The court held UK where the court awarded dam-









50 GeneralCologne Re Topics 10 51

Today asbestos

continues to serve

important func-

tions: it is used in

the protective suits

and masks worn by

race car drivers, in

break lining and,

above all, in the

manufacture of

protective clothing

for firefighters.









ages to two mesothelioma victims award, by the New South Wales Dust sioners of Public Works removing

where it was evident that only one Diseases Tribunal, includes A$ 100,000 pipe insulation from 1985 to 1989

defendant was involved.34 (US $ 51,410) for pain and suffering - and was exposed to friable asbestos.

I In August 2001, it was reported that the highest award ever for pain and Although the plaintiff was described

eleven Australian women whose hus- suffering awarded to a West Austra- as “physically well,” he allegedly

bands died from asbestos-related lian plaintiff. The plaintiff worked for developed a condition known as

diseases have reached a landmark out building products manufacturer “reactive anxiety neurosis” about the

of court settlement. The women had James Hardie from 1954 to 1957 and risk of getting mesothelioma. The

filed suit seeking damages related to subsequently worked for Telecom court found that the Commissioners

the hardships they have suffered since where he cut asbestos pipes manufac- of Public Works was negligent be-

their husbands’ deaths. According to tured by James Hardie.36 cause it knew of the dangers associ-

the plaintiffs’ attorney, “previously I In July 2001, it was reported that two ated with asbestos exposure and did

widows’ claims were not regarded as out of court asbestos settlements nothing about it. A number of similar

viable if the widow’s husband died have occurred in Ireland. Two em- actions have reportedly been filed by

over the age of 65, or earlier if they ployees of the Commissioners of other employees who worked in areas

weren’t working at the time of diag- Public Works who worked in base- where asbestos was present.38

nosis, so that is really quite a signifi- ments of government buildings have In April 2001, it was reported that a

cant breakthrough.” The settlement won Irish Pounds 179,260 (about retired British dock worker who sued

reportedly recognizes the economic US $ 192,697). Twenty-two additional his former employer for fear of con-

value of the work the widows’ hus- Public Works employees have also tracting asbestosis won an out of

bands did at home and outside of filed asbestos suits.37 court settlement for GBP 10,000

their occupation.35 I In June 2001, it was reported that the (about US $ 14,386). This was report-

I In July 2001, an Australian building Irish High Court awarded a public edly the first time anyone in the UK

products manufacturer was ordered works employee about US $ 73,140 received compensation for the fear of

to pay an asbestosis victim A$ 251,000 for fear of contracting an asbestos- contracting asbestosis. The plaintiff

(US $ 129,040). This is reportedly the related disease even though the em- had no signs of the disease. The em-

first judgement ever awarded to a ployee did not have the disease. The ployer/defendant was Union Castle

West Australian asbestosis victim. The plaintiff had worked for the Commis- Line.39









52 GeneralCologne Re Topics 10 53

A Brief Discussion of the New out $ 15.7 billion (£ 11 billion) for asbes- Reclassification of

Asbestos Reports tos and environmental claims since its Asbestos Claims and Other

The lessons from these verdict summaries inception.41 Legal Developments

are reinforced by several recent studies. A recent Rand study offers the most Some of the increasing asbestos costs

A summary of the highlights provides a comprehensive evidence that asbestos facing the insurance industry are arising

sense of how asbestos litigation has claims have not yet peaked, despite from traditional defendants’ efforts to

changed, and how the new trends can some earlier decline.42 In its study enti- reclassify asbestos products claims into

affect what insurers write today. tled “Asbestos Litigation in the U.S.: premises/operations claims. Many as-

A New Look at an Old Issue,” Rand bestos manufacturers also installed their

From a financial standpoint, several rat-

reports some interesting findings: products. While the product insurance

ing agencies and actuarial firms have

At least five asbestos firms reported a coverage held by these firms has just

raised their asbestos cost estimates by

sharp increase in new claims activity about been exhausted, they may find

substantial amounts.40 In October, 2000,

from 1998 to 2000, with two compa- new unaggregated limits if their reclassi-

A.M. Best increased to $ 65 billion its es-

nies reporting a doubling of new fication efforts are successful. Ultimately,

timation of how much asbestos personal

filings from 1999 to 2000. courts and arbitration panels will pro-

injury claims will cost U.S. insurers,

The number of mesothelioma claims vide answers; to date, manufacturers

which represents a 62 % increase over its

have increased since the mid-1990s, have won some arguments that product

1996 projection. Tillinghast released a

after a decline over most of that limitations or exclusions should not ap-

similar price tag of $ 55 to $ 65 billion for

decade. ply to installation activities. The financial

U.S. insurers. Tillinghast estimated that

Nonmalignant claims have increased implications of claim reclassification are

the total liability of all defendants and in-

more dramatically, so that approxi- significant given the exposures of facility

surers to be $ 200 billion with non-U.S.

mately 90 % of new plaintiffs do not employees, contractors, and subcontrac-

insurers paying 31% (US $ 62 billion) of

actually have asbestos disease at tors working on the site, as well as em-

the total. Milliman & Robertson in-

the time of filing; 61 % of the claims ployees of the manufacturer/installer.

creased its estimate of the mid-range

dollars paid to date have gone to Clearly, these insureds have a great deal

cost of asbestos personal injury claims

claimants with nonmalignant dis- of interest in tapping additional and pos-

facing U.S. insurers to $ 70 billion - a

eases. sibly unlimited liability coverage.

56 % increase over their previous $ 45

billion estimate - and projected total More to the point of spreading asbestos Courts throughout the U.S. are also

asbestos liabilities to be $ 275 billion. litigation, Rand observes that: playing a role in perpetuating the in-

Milliman & Robertson also reported that I More than half of the industries creasing asbestos liabilities facing de-

Manville increased its estimate of the grouped in the U.S. Standard Indus- fendants. To date, the Supreme Courts

number of U.S. workers believed ex- trial Classification have been named of California, Texas, and Wisconsin have

posed to asbestos from 20 million in the in asbestos litigation. held that plaintiffs who previously

early 1980s to 80 million today. Standard I “Nontraditional” defendants are now settled asbestosis claims can file new

& Poor’s expected U.S. insurers to put paying 60 % of asbestos expenditures. lawsuits should they contract meso-

Asbestos is indis- up an additional $ 5 billion to $ 10 billion I Plaintiffs’ attorneys are identifying thelioma.43 These courts have generally

pensable as an in- of asbestos reserves this year. new defendants in industries where held that asbestosis and mesothelioma

sulating material All four organizations cited increased ex- workers have not previously come are separate and distinct diseases with

in the aerospace posures and litigation as major reasons forward in great numbers to claim separate latency periods and statutes of

industry. The solid- for the higher estimates. Although they compensation for asbestos injuries. limitations. Plaintiffs have also had some

fuel rockets used by focused more on the U.S. insurance in- I Plaintiffs’ attorneys are developing success persuading courts to allow

the American space dustry, recent reports of Equitas reserve new legal theories on which to base asbestos victims to sue their employer in

shuttles, for exam- strengthening reflect the international asbestos claims against defendants tort, thus circumventing the sole remedy

ple, are sheathed impact of asbestos liability. In July 2001, who may not have been sued previ- provisions of workers’ compensation

in asbestos. it was reported that Equitas added $ 2.4 ously for asbestos injuries. laws. In a related area, a few courts have

permitted tort damages based on fear of

billion (£ 1.7 billion) to its asbestos per-

asbestos-related illness, absent any proof

sonal injury reserves due to increasing

of physical or emotional injury.

U.S. claims activity, after having paid









54 GeneralCologne Re Topics 10 55

Public aware-

ness of asbestos

hazards has

led to protests

around the

globe.









structions, recommendations, warnings, asbestos exclusion and other wordings Endnotes 12 Hernandez v. Kelly Moore Paint Co. 30 Reuters 2/28/02 & Le Monde 3/2/02.

Revisiting Asbestos Exclusions as reported in “Deals and Suits,” 31 Le Monde 3/2/02.

Given continuing asbestos exposures or advice given, or which should have in light of the new developments in 1 Reuters 2/28/02, Le Monde 3/2/02, Texas Lawyer (Sept. 10, 2001 at 10). 32 OneWorldUS 12/21/01.

Financial Times Ltd. 3/6/02. We note that Kelly Moore also won 33 Comtex News Network 12/15/01.

and that peripheral or nontraditional been given, with regard to asbestos asbestos litigation. Insurers may also 2 OneWorldUS 12/21/01. several defense verdicts over the past 34 Post Magazine via



defendants are increasingly pulled into while others remain silent on warnings. want to examine their current under- 3 The Times 4/17/01 and The Irish two years. InsuranceWindow.net 12/11/01.

Times 6/16/01. 13 Breaux v. North American Refractories 35 Australian Broadcasting Corp. 8/2/01.

litigation for those exposures, insurers Some specifically exclude personal injury writing practices to understand the 4 Reuters 12/31/01 and Reuters 1/14/02. Co., No. 08271-I (Tex. Dist. Ct., Dallas 36 News.com.au via News Interactive

and advertising injury allegations while exposure and match their coverage 5 Insurance Windows and Barlow Lyde Cnty. July 31, 2001). 7/3/01.

may wish to examine their risk assess- & Gilbert 12/11/01. 14 Plumb v. Sears, Roebuck and Co., No. 37 The People 7/1/01 and The Irish Times

ment practices and asbestos exclusions. others reference only bodily injury intent with the particular exclusion or 6 Corrosion Proof Fittings v. EPA, 947 106851 (N.Y. Sup., St. Lawrence Cnty. 6/16/01.

F.2d 1201 (5th Cir. 1991). Asbestos Sept. 30, 2000). 38 The Irish Times 6/16/01.

There is a plethora of manuscript asbes- and/or property damage. wording used. bans are in effect in most European 15 Blackburn v. Swan Transportation Co. 39 The Times 4/17/01.

nations, but substantial mining and Tex Dist. Ct., No. 98-03696-F and 40 A.M. Best, “Asbestos Claims Surge Set

tos exclusions in use today. Each ex- The principal legal test will be whether Whatever underwriting and policy word- consumer use continue in Canada, Dews v. Swan Transportation Co. to Dampen Earnings for Commercial

clusion is designed to fit a particular the exclusion is susceptible to more than ing approach is taken, it is clear that the Russia and South America. See f/k/a/ Tyler Pipe Industries, No. Insurers,” (May 8, 2001). See Best-

LaDou, Landrigan, Bailar III and 40551, Texas Dist Ct., Smith Cty. Wire May 8, 2001; Standard & Poors,

policy, so the terminology varies and one interpretation, and, hence, ambigu- new wave of asbestos claims warrants Frank, “A Call for an International 16 Hutcheson v. Shell Wood River “Asbestos Claims Pose Significant

Ban on Asbestos,” Canadian Medical Refining Co., No. 99L450 But Not Catastrophic Threat to U.S.

wordings cannot be used interchange- ous.44 In many jurisdictions ambiguity the industry’s attention. The exposures Association Journal, Commentary (Ill. Dist. Ct. May 19, 2000). Insurers,” Standard & Poor’s Cred-

ably. is construed against the insurance com- may be relatively small, but the threat (Feb. 20, 2001 at 489). 17 Los Angeles Times 12/17/01. itWeek (Aug. 15, 2001 at p. 15)(S&P).

7 Angelina and Biggs, “Asbestos Claims: 18 Harris Martin Columns Asbestos See note 2 for Tillinghast article.

It is possible that some of these exclu- pany drafting the policy, and the insured and costs of litigation are large and Is This the Beginning or the End?”, 12/01. 41 Bestwire, July 20, 2001.

Tillinghast-Towers Perrin presentation 19 Harris Martin Columns Asbestos 42 D. Hensler, S. Carroll, M. White and J.

sions could be interpreted by courts in might then avoid the policy exclusion. growing. Asbestos exposure has not to 2001 RAA Education Conference 12/01. Gross, “Asbestos Litigation in the U.S.:



certain jurisdictions to allow coverage for Insureds might also argue that they had gone away; it has only shifted to a new (May 30, 2001). 20 Crawford v. AcandS et al., No. 01L781, A New Look at an Old Issue,” Rand

8 The Seattle Post-Intelligencer pub- Ill. Cir. Ct. Madison Cty. Institute for Civil Justice (Aug. 2001).

certain incidental uses of asbestos, thus “reasonable expectations” of coverage, group of insureds with less connection lished a series of articles on asbestos 21 Cargile et al. v. AC&S Inc. et al., 43 See Pustejovsky v. Rapid-American



leaving the insurer open to asbestos and the incidental nature of any asbestos to asbestos than the bankrupt manufac- products and current exposures. Consolidated No. 24-X-00000381, Corp., 35 S.W.2d 643 (Tex. 2000).

See Schneider and Smith, “Asbestos Md. Cir., Baltimore City. 44 Most cases we reviewed turned on

claims against peripheral defendants. use might support their case. In any turers who gave them asbestos and Being Sold, EPA Tests Show,” Seattle 22 Johnson v. AcandS et al., No. CV2000- factual questions: did asbestos cause

Post-Intelligencer (February14, 2000) 181, Miss Cir. Ct., Holmes Cty. the loss, and is that causal connection

Some clauses only exclude the losses event, the variety of manuscript policies asbestos products at the outset. Under- and Schneider, “By Any Name, 23 Bell v. Dresser Industries, No. direct enough to warrant application



arising out of the manufacture or distri- will add to the amount of litigation standing that connection is the chal- Asbestos is Still a Killer,” A-920961SC(19), Texas Dist. Ct., of the exclusion. See, for example,

Seattle Post-Intelligencer (February Orange Cty. Stoute v. Long, 722 So.2d 102, 104

bution of asbestos and may be inter- because a favorable court ruling on one lenge underwriters face today, and how 28, 2001). All articles are available 24 Hutchison v. Combustion Engineering (La. App. 1998), where the exclusion



preted by some courts not to exclude may not answer questions on the very well they do it will determine whether at www.seattlep-i.com. et al., No. 18215, Texas Dist. Ct., did not apply when a workman was

9 Schneider and Smith, “Nation’s Nolan Cty. injured on an asbestos abatement

the incidental use of asbestos. Some different wording of another. Insurers insurers must ride yet another wave of Mechanics at Risk from Asbestos,” 25 Cook v. ACandS; Nardone v. ACandS; project because an explosion, not

Seattle Post-Intelligencer (Nov. 16, Schrader v. ACandS; Worthen v. asbestos, caused the injury. But see

specifically exclude any supervision, in- may wish to reexamine their current asbestos claims in the future. 2000). We note that, from verdicts ACandS; and Gionotti v. AcandS LaFleur v. Hollier Floor Covering, Inc.,

reported on line, employees of tire Consolidated Case No. 99001238, 774 So.2d 359, 360 (La. App. 2000),

centers and auto parts stores have Maryland Cir. Ct., Baltimore City. where the exclusion did apply when a

also filed asbestos suits, so the 26 Hardcastle v. J-M A/C Pipe Corp., floor installer negligently removed

universe of auto-related exposures No. 30058-2 (Calif. Super. Ct., tiles containing asbestos; the in-

appears to extend beyond brake Alameda Cty.). sured’s attempt to characterize the

and auto repair shops. 27 Calderon v. Quigley, No. 2000-1703 claim as different acts of negligence

10 S. Warren, “Asbestos Suits Target (Texas Dist. Ct., El Paso Cty.). “is of no consequence” because each

Makers of Wine, Cars, Soups, Soaps,” 28 Wells, et al. v. Flexitallic Inc., et al., related to asbestos exposure.

Wall Street Journal (April 12, 2000 No. A-161,748 (Texas Dist. Ct.,

at B1). Jefferson Cty.).

11 Lane v. Fleitalic Inc., No. BC224881, 29 Newsquest (North East) Limited,

Calif. Super. Ct., Los Angeles Cty. The Northern Echo 1/10/02.









56 GeneralCologne Re Topics 10 57