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The Next Asbestos
Bonnie Boccitto, FCAS, CPCU, MAAA
Chief Underwriting Officer
Munich-American RiskParnters is a division of American Re-Insurance Company
The Next Asbestos
 Why has asbestos proven to be so difficult to
quantify?
 On the horizon
 Electromagnetic Fields
 Silica
 Pharmaceuticals
Munich-American RiskParnters is a division of American Re-Insurance Company
Asbestos
Characteristics of the product
 Large number of people affected
 Large number of defendants
 Disease manifests after a long period of time
 Non-reversible, fatal effect
 Use of court system (tort) rather than WC
Munich-American RiskParnters is a division of American Re-Insurance Company
Asbestos
Characteristics of a Legal Environment
 Evidence of concealed knowledge
 Continuous exposure theory
 Class action suits
 Bankruptcies
 “Fear of” claims
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Asbestos Litigation
1940’s
1950’s – 60’s
1973
1981
1982
Late 1980’s
Early 1990’s
Mid 1990’s
2000
2002
2003
Exposure in ship building industry during WW II
Exposure at construction sites
Asbestos claims began
Judge Brazelon declares continuous exposure
theory
16,000 claims against Mansville/ Mansville
declares bankruptcy
Class action suits begin
Pleural plaque (unimpaired) claims
Defendants offered $1.2 billion settlement
agreement with no value for future pleural plaque
claims
30,000 New Claims
90,000 New Claims
100,000 New Claims
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Asbestos: Current Status
 Federal asbestos trust fund discussions delayed
 Rand estimates 730,000 total claims
 Estimate 200,000 claims still pending
 Milliman projects that the total cost of settlements will
ultimately reach $265 billion
 Asbestos defendants have grown from 300 in 1980’s
to 8,400 today
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Electromagnetic Fields (EMF’s)
 U.K. group re-visiting worldwide studies to determine
link between EMF’s and cancer.
 Claims that exposure to electromagnetic fields cause
reactions in the skin similar to the reaction to
radioactive material.
 Fourfold increase in tumors on the auditory nerve of
those using analog cell phones over a period of 10
years
Munich-American RiskParnters is a division of American Re-Insurance Company
Electromagnetic Fields (EMF’s)
 Study by EU members found breaks in individual
strands of DNA
 NYC Council is considering a long-term study of cellphone base stations
 A 23-year study concluded that there is no established
link between the broadcast antennas and brain and
nervous systems cancers
Munich-American RiskParnters is a division of American Re-Insurance Company
Electromagnetic Fields (EMF’s)
 Affects large number of people
 Potential latent effects
 Utilities as defendants would be unattractive. Could
other defendants be found?
 Cell phone manufacturers would be attractive
defendants
 Seriousness of affect
 Could affect WC and tort system
 Class action suits definitely possible
 “Fear of” claims definitely possible
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Silica
 Silica comes from sand and gravel with a high
concentration of silicon dioxide and is found in concrete
powder, glass, detergents, and ceramics.
 Silica causes silicosis, pulmonary fibrosis, and allergic
bronchopulmonary aspergillosis
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Year
1975 – 2001
2002
2003
Silica Cases
200
3,500
22,000
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Silica
Multi-Defendant Suits
 Multi-Defendant Claims
 California: 50 defendants
 Philadelphia: 15 co-defendants
 Florida: 8 defendants
 Washington state: 60 potential defendants
 Alabama court dismissed a complaint against 75
defendants for lack of specifics tying the
defendants together.
Munich-American RiskParnters is a division of American Re-Insurance Company
Silica
Class Action
 Estimates suggest 480,000 former miners with silicosis
in South Africa.
 Miners in Ontario
 10,000 claimants in Federal Court in Texas in 2006.
 New Jersey silica plaintiffs were unsuccessful in a recent
attempt to have the silica litigation designated as a mass
tort.
 California “class action” dismissed
Munich-American RiskParnters is a division of American Re-Insurance Company
Silica
“Fear of” Claims
 Sandblaster who was diagnosed with silicosis but
was never disabled, may still receive an award of
medical benefits from his former employer.
 Ohio considering bills to block “fear of” claims
Munich-American RiskParnters is a division of American Re-Insurance Company
Silica
Federal Settlement
 Lawyers moving to silica claims if asbestos litigation
is not found satisfactory
 Some talk that silica to be part of the $140 billion
privately financed, privately administered asbestos
trust fund
Munich-American RiskParnters is a division of American Re-Insurance Company
Silica
 Large number of people effected
 Large number of defendants
 Disease manifests after a long period of time
 Non-reversible, fatal effect (but preventable)
 Use of court system (tort) rather than WC
 “Fear of” claims
 Class actions
 privately funded federally administered settlement
 International in scope
Munich-American RiskParnters is a division of American Re-Insurance Company
Pharmaceutical
Manufacturers
 Pfizer
 Merck
 Novartis
 Lilly
 Wyeth
J & J
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Pharmaceuticals
Large Number of Claimants
A U.S. Government study reported that more than
40% of Americans take at least one prescription drug
and one in six take at least three.
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Pharmaceuticals
Large number of defendants
 Manufacturers
 Doctors
 Pharmacists
 Managed care organizations
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Pharmaceuticals
Class Action
 BMS, manufacturer of the drug Serzone, agrees to
settle class action involving over 2,000 plaintiffs
 States enter litigation
 Purdue Pharma, manufacturer of OxyContin, has
settled with the Attorneys General of West Virginia
and Florida on claims that the company
misrepresented the additive nature of the drug,
creating a public nuisance and violating state
deceptive trade practices.
Munich-American RiskParnters is a division of American Re-Insurance Company
Pharmaceuticals
Latent Effects
Personal Injury, Property Damage or Advertising
Liability shall be determined under the Policy in
effect on the date in the Annual Period when Notice
of Integrated Occurrence is first given
Munich-American RiskParnters is a division of American Re-Insurance Company
Pharmaceuticals
 Large number of people affected
 Large number of defendants
 Disease manifests after a long period of time
 Non-reversible, fatal affect
 Use of court system (tort) rather than WC
 “Fear of” claims
 Class actions
 privately funded, federally administered settlement
 International in scope
Munich-American RiskParnters is a division of American Re-Insurance Company
Thank you for your interest.
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