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Current Issues in General Insurance (CIGI) Seminar

Current Issues in General Insurance (CIGI) Seminar. The Barbican, Tuesday 17 May 2005 Mohammad Khan Principal Consultant PricewaterhouseCoopers. Objectives. Provide an update as to the current situation in Industrial diseases Discuss recent claims experience.

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Current Issues in General Insurance (CIGI) Seminar

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  1. Current Issues in General Insurance (CIGI) Seminar The Barbican, Tuesday 17 May 2005 Mohammad Khan Principal Consultant PricewaterhouseCoopers

  2. Objectives Provide an update as to the current situation in Industrial diseases Discuss recent claims experience

  3. Industrial diseases under consideration • Asbestos • Silica • US Pollution • UK Pollution • Lead • Toxic Mold • VWF • NHL • UK EL

  4. Asbestos US • Trust fund • Other current issues UK • Current issues

  5. Silica - Is Silica the next asbestos? Some facts • The overall US mortality rate for deaths from silica between 1990 and 1999 was 1.21 deaths per million compared to a national death rate from asbestosis of 5.41 deaths per million. • Over 8,400 companies have had 730,000 asbestos claims filed against them whereas currently only 400 companies have 70,000 silica claims filed. • The largest silica award has been $7.5 million in 2001. In comparison the largest asbestos award was $57 million in 2000.

  6. Silica - Is Silica the next asbestos? The Future • The current surge in the filings of silica claims appears to be mainly due to: • Asbestos lawyers looking for new torts to pursue • Tort reform, particularly in Mississipi, Ohio and Texas, which will restrict Silica claims after a certain date. • Future development is highly uncertain

  7. US Pollution Recent Changes • The all-sums allocation methodology is increasingly being used in various states • Variation by state • Ruling legislation • Modified pro rata

  8. Toxic Torts Environmental pollution (UK), lead paint and toxic mould Once these toxic tort losses were thought to be significant sources of liability for insurers. They were even thought of as the next asbestos. What has happened to these latent claims? Should insurers still be concerned by them?

  9. UK Pollution Background • Comparison to US • No retrospective liability in UK • Insurers not generally holding significant reserves

  10. Lead Background • In the late nineties, some successful asbestos and tobacco tort lawyers announced they would be targeting the former manufacturers of lead paint and pigment. • Cases to date • Why the lack of claims?

  11. Toxic Mold Background • Prior to 2001, mold was primarily viewed by insurers as a maintenance issue. • In 2001, a $32 million verdict to cover mold-related damages was quickly followed a few days later by a tropical storm hitting Texas (ideal conditions for mould to grow). Within weeks, plaintiff attorney firms had created “mould information” websites and many commentators commented that mould was the next asbestos. • Why the lack of claims?

  12. Noise Induced Hearing Loss (NHL) Background • Noise Induced Hearing Loss is caused by exposure to excessive noise levels, often over a significant period of time. • Numbers of claims filings fell steadily since the mid 1980s, however, claims filings have stabilised in recent years with a slight increase occurring in recent years. The future • European directive

  13. Vibration white finger (VWF) Background Future • New regulations on the control of vibration at work and will come into force on 6 July 2005 • Recent research suggests that around 2 million people in Britain are exposed to potentially harmful levels of hand-arm vibration and that around 300,000 people may suffer from moderate to severe finger blanching linked to such exposure.

  14. Toxic Torts The future • The future development of these claims is highly uncertain • What should insurers do?

  15. UK EL Long tail diseases • The EL insurance market has been significantly impacted by long tail disease claims. • In 2002 the ABI published a paper suggesting that reform of the EL insurance market was required. • Separation of long tail diseases from EL policies was discussed

  16. UK EL Possible benefits of separation • Reduce volatility in premium rates • Minimise cost • Improve availability of EL insurance

  17. Did you know that PricewaterhouseCoopers employers the most non-life actuaries in Europe? Mohammad Khan is a Principal Consultant in the Actuarial and Insurance Management Solutions practice of PricewaterhouseCoopers. All views expressed in this article are solely those of the author and not PricewaterhouseCoopers.

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