Fitch raises asbestos claims estimate to $100bn
Following a review of recent years' asbestos-related claims and litigation activity and insurers' paid and incurred loss experience, Fitch has raised projection for ultimate all-time US industry incurred losses to $100 billion compared with a previous estimate of $90 billion.
Exposure to asbestos, which often occurs in the workplace, is said to cause a rare and aggressive form of cancer. Asbestos is a material that was commonly used in the manufacturing and construction industries between the 1950s and the 1980s. People who worked in these industries during this time were regularly exposed to asbestos, inhaling asbestos dust and fibres over a prolonged period of time.
Spiralling asbestos claims from the US almost resulted in the collapse of the Lloyd’s of London insurance market in the 1990s.
Fitch estimates the US industry's asbestos reserve deficiency is in the range of $8 billion-$16 billion at year-end 2017.
"Overall, the industry reserves remain deficient, but Fitch believes insurers, in aggregate, rated entities will absorb the deficiency over time without adversely affecting capital adequacy or ratings over the long term," said Doug Pawlowski, Fitch senior director.
Calendar year incurred losses for asbestos have been relatively stable at approximately $1.6 billion from 2014-2017. Continued reported loss stability along with demonstration that higher paid loss and settlement activity are mitigating exposures could support a modest reduction in Fitch's survival ratio targets.
Asbestos losses continue to create a modest earnings drag for the industry and insurers with meaningful asbestos exposures, Fitch noted. For a group of 25 insurers with the largest US asbestos exposures, continued asbestos incurred losses have added 70 basis points to the group's aggregate combined ratio over the past five years.
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news
Lloyd’s platform affected by Iran sanctions
JLT Re poaches Guy Carpenter talent to head credit and surety
EPUL boosts commercial property underwriting with ex-MS Amlin, Zurich hire
Brown & Brown snaps up US specialty claims management provider PDA
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Intelligent Insurer
Newton Media Ltd
Kingfisher House
21-23 Elmfield Road
BR1 1LT
United Kingdom