Insurers face huge increase in expected asbestos payouts

Insurers are facing an additional $15bn of losses related to Asbestos.

A new study by insurance credit rating agency AM Best finds that claims linked to asbestos on historic policies “show no sign of abating”.

The latest increase brings the total forecast bill for companies to about $100bn.

The industry has paid out about $64bn for asbestos exposure and has set aside $21bn in reserve for future claims.

But costlier treatment, rising life expectancy and creeping litigation bills are still pushing up expenses more than expected, the FT reports.

This has prompted ratings agency AM Best, which raised its estimate in 2012, to do so again.

But analysts have said the asbestos payouts are to be made over several years, however, and should be easily absorbed by the well-capitalised and diversified global insurance industry, analysts said.

AM Best says asbestos and environmental claims have added an average of 0.6 basis points over the past five years to the industry’s “combined ratio” of claims paid and expenses incurred as a proportion of premium income.