Asbestos Exposure in US will cost

$200,000,000,000

ENN 14jul01

Asbestos has overtaken environmental liabilities including claims from exposure to hazardous waste sites in terms of net cost to U.S. property and casualty insurers.

Settlements to individuals exposed to asbestos in the United States and related expenses will ultimately reach $200 billion, according to a study conducted by Tillinghast-Towers Perrin, an actuarial and management consulting firm to the financial services industry.

Of this amount, Tillinghast estimates that 39 percent of the costs will fall on the asbestos defendants, such as manufacturers and distributors of asbestos and the owners of premises where people were exposed to asbestos.

An estimated 30 percent of the cost of claims will be borne by the U.S. insurance industry, and 31 percent will be borne by overseas insurers, including those in London, Europe, Asia, Australia, and South America.

Asbestos is a naturally occurring mineral found in soil and rock in some areas of the United States. Used for insulation in a variety of industries, microscopic asbestos fibers are released into the air when the material is mined, or when insulating products are cut or drilled.

Inhalation of asbestos fibers is the method of exposure that is most likely to cause adverse health effects for people, according to the Agency for Toxic Substances and Disease Registry (ATSDR), a U.S. federal agency.

Exposure to asbestos can be fatal. Lung cancer causes the largest number of deaths related to asbestos exposure. Asbestosis is a serious, progressive, long-term disease of the lungs. It can be fatal.

Workers in industries that use asbestos or products containing asbestos, such as building materials, may inhale fibers that are suspended in the air. Workers may also carry asbestos fibers home on their clothes, where family members might come into contact with asbestos by inhaling the fibers.

People who live or work near asbestos-related operations may inhale asbestos fibers that enter the air because of releases into the environment.

Generally, asbestos fibers are thin fibers too small to be seen; as they float in the air, they can easily be inhaled. People may also swallow asbestos fibers if they eat in areas where asbestos fibers are in the air or if they drink water contaminated with fibers. Homes and businesses insulated with material containing asbestos may also be a source of exposure.

Most U.S. exposures to asbestos occurred before the 1970s when the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) implemented limits on asbestos exposure and use.

The ATSDR estimates that between 1940 and 1980, an estimated 27 million Americans workers had an occupational exposure to asbestos that could result in health effects.

Although exposures may have slowed, the number of asbestos claims filed is rising, says Jenni Biggs, a consulting actuary with Tillinghast-Towers Perrin. "Although most people thought that the claims would have trailed off by now, the number of plaintiff filings has increased dramatically, with 50,000 to 60,000 claims filed against some defendants in the last year, compared to averages near 20,000 in the early to mid-1990s."

More than 26,000 of those people filed a class-action lawsuit in February 2000, seeking clean-up and medical-monitoring funds for those exposed to asbestos from contaminated vermiculite ore. For more than 60 years, W.R. Grace & Co. dug vermiculite ore out of the Zonolite Mountain in Libby, Montana. The suit alleges that decades of unsafe mining operations there have led to illness and death for thousands of mineworkers, processing plant employees, and Libby residents.

ATSDR's preliminary report on the first round of asbestos testings in Libby indicates that during 1979 and 1998, the mortality rate from asbestosis in Libby was 60 times higher than in the total U.S. population.

Mike Angelina, a consulting actuary with Tillinghast-Towers Perrin and co-author of the new study, said, "A significant majority of the new claims do not relate to individuals with mesothelioma or lung cancer, but rather to nonmalignant diseases. The propensity to sue for nonmalignancies has clearly increased."

More than 450,000 claims have been filed to date, and Angelina projects that close to 1 million claims will be filed before the litigation ends, unless some type of federal legislation is passed.

Tillinghast's estimate of $55 billion to $65 billion of ultimate asbestos claims borne by U.S. insurers exceeds its estimate of $30 billion to $40 billion relating to hazardous waste sites.

The total estimate of $85 billion to $105 billion for asbestos and environmental claims liabilities combined is in excess of the amounts recognized by the U.S. insurance industry, which has currently paid $41 billion for these exposures and holds an estimated $23 billion in reserves.

According to Angelina, "With filings at an all-time high, asbestos is the Energizer bunny of toxic torts: It just keeps going and going and going ..."