Insurers are being warned they could face a historically high level of claims from US asbestos manufacturers over the next two years.
Asbestos Liability: Trends and Key Credit Issues, a report by analysts Fitch, reveals that more asbestos claims have been filed in 2000 than in the past three years.
The report's author, Omar Jama, conceded: “There could be some exposure for the London Market. Estimates are that total claims could reach £30m ($50m) in the US.”
But he declared: “Insurance coverage varies and is difficult to assess, since litigation may be required to get insurers to pay.”
Analysts had thought that asbestos-related claims have been rising because large US producers such as Owens-Corning and Armstrong were filing for bankruptcy protection.
This is because claimants have only a limited period in which to file their claim if a company seeks protection from its creditors. Other asbestos manufacturers are facing claims in excess of their reserves.
But Jama found that the threat of bankruptcy was only a temporary factor in accelerating claims.
More important was the “aggressive” action of US law firms in seeking out potential claimants.
He said: “We are seeing law firms becoming more adept at gathering claims in terms of placing adverts in newspapers to attract asbestos-related disease sufferers. Legal firms have become more aggressive in this respect.”
Jama also noted that the size of asbestos claims is also increasing, from an average of £2,000 ($2,950) in 1997 to £13,500 ($20,000) last year.
He added: “We thought that asbestos claims had reached their peak. But more could follow from the large pool of people who have been exposed to asbestos but not yet developed any illnesses.”