MAC: Mines and Communities

European insurers face new wave of asbestos claims

Published by MAC on 2004-03-19

European insurers face new wave of asbestos claims

Simon Challis, European Insurance Correspondent, Planet Ark (Reuters)

March 19, 2004

London - European insurers face a tidal wave of asbestos claims from Europe and Australia that could be financially crippling, leading experts said.

Insurers in London and across the continent have tended to think the U.S. asbestos crisis, which has cost billions of dollars and undermined the finances of corporate America, could not be repeated in Europe, where social and legal systems are very different.

But Peter Taylor, a partner at law firm Lovells with long experience in dealing with asbestos claims, told an industry conference in London: "I'm here to dispel a notion that is deep-seated in London that the asbestos problem is something that happens 'over there'." "Be afraid, be very afraid," he said. "Don't listen to the actuaries, who say it isn't a problem."

While it would be wrong to copy the trends in asbestos claims in the U.S. onto Europe, a comparison between asbestos use on the two continents has "disturbing conclusions", he said.

In Europe, the use of asbestos, a cancer-causing mineral fibre that was used in the manufacture of a wide variety of products for its heat-resistant qualities, has been controlled or banned very recently in comparison with the U.S., Taylor said.

While the peak of U.S. asbestos claims has probably been reached, "the worst is still to come" in Europe, he said.

Law changes and landmark court judgements in a number of European countries have extended employers' liability regarding their workers' exposure to the harmful material, Taylor said, and eroded some of the legal defences insurers may have otherwise used to defend themselves against a torrent of claims.

Insurers have not reacted to this growing threat, Taylor said. "I've been looking to see an increase of provisions in response to these striking jurisprudential developments." "I have yet to see them," he said.

Industry analysts estimate the cost of asbestos-related illness claims in the U.S. will total around $265 billion, of which insurers and reinsurers, including several based in Europe, will have to pay at least $65 billion.

The threat of an expensive torrent of asbestos claims does not only come from Europe, another expert said.

Claims from Australia, where asbestos was mined and widely used until the 1980s, are on the rise too, Keith Rayment, Managing Director of Axiom Consulting told delegates.

"If you have a book of business that has liability to Australian asbestos (claims) then you should be afraid of the potential consequences," Rayment said.

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