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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 04, 2013 12:00 AM (EST)
While generally not a material drag on the property/casualty (P/C) industry’s earnings, industry losses from asbestos and environmental (A&E) claims resumed an upward climb in 2012. Annual incurred A&E losses rose 12% in 2012 after a 31% decline in 2011. This comes amid a rising number of lung cancer lawsuits related to asbestos and evolving mass tort exposures on the environmental side. Yet industry funding of net A&E exposures has reached nearly $114 billion of estimated industry A&E liabilities of $127 billion, reflecting a close to 90% funding rate.
In December 2012, A.M. Best Co. raised its estimate of net ultimate asbestos losses for the U.S. P/C industry to $85 billion from its previous estimate of $75 billion. No change has been made to the estimate of net ultimate environmental losses, which remains at $42 billion. The higher asbestos loss estimate reflected ongoing losses of roughly $2 billion per year with claim payments averaging $2.5 billion per year. A.M. Best’s view of ultimate industry losses for A&E is $127 billion. As of year-end 2012, the industry had funded, through a combination of paid losses and loss reserves, nearly $76 billion in asbestos exposures and approximately $38 billion in environmental costs.
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A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.