Asbestos losses hit five-year high with a surge to $1.5bn

Asbestos calendar-year incurred losses jumped 37.3% to $1.5 billion in 2024, the second consecutive year of double-digit growth and the highest level in five years, AM Best has revealed.

Environmental losses, on the other hand, fell 23% in 2024 to $0.4 billion, following a small decline in 2023.

Since 2020, insurers have paid out around $13 billion for asbestos and environmental (A&E) claims, while incurring just under $9 billion in losses, AM Best reported.

Asbestos reserves fell 2.2% to $14.5 billion last year, while environmental reserves dropped 3% to $4.5 billion.

“At current payout levels, A&E reserves will be exhausted in about eight years, assuming no additional reserve strengthening,” Jieqiu Fan, associate director at AM Best, said.

Calendar-year data shows that net incurred and net paid losses for asbestos-related claims rose, whereas environmental claims saw net incurred losses fall even as net paid losses increased, analysts noted.

AM Best estimates the industry has funded 97% of its total A&E losses, leaving unfunded liabilities of roughly $3 billion for asbestos and $1 billion for environmental.

The top 30 insurer groups accounted for 96% of all A&E paid losses in 2024 and held 94% of the industry’s total A&E reserves. Eight groups posted net incurred losses of $100 million or more in 2024, up from seven in 2023.

A&E loss payments grew 12% last year, driven by higher payouts from several large groups, including Hartford Insurance Group, Travelers Group, American International Group, Liberty Mutual Insurance Companies, Nationwide Group, and Munich-American Holding Corp.

Industry funding for the estimated $146 billion in net A&E exposures stands at roughly $142 billion, comprising $123 billion in cumulative paid-to-date losses and $19 billion in reserves for future payments, the ratings agency said.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.