Another one bites the dust : the effect of past asbestos exposure on the liability obligations of current insurers

Abstract

Asbestosis claims are the classic example of long-tail insurance risks. The dangers of asbestos have been recognized since ancient Greece since slaves exposed to it began to die from terrible lung disease and breathing difficulties. The first asbestos-related injury claims appeared in the 1960's and have soared since then. The ever increasing publicity of asbestos in the insurance industry means that claims of this class are increasing dramatically every year. The insurance industry now faces a time bomb of claims from people directly or indirectly exposed to asbestos. The main feature of asbestos-related risks is the latency period. Asbestosrelated illnesses are generally take considerable time to manifest themselves, making it difficult to establish insurers' liabilities. The main objective is to explore the impact of the long-latency risks of asbestos on the insurance industry, making special reference to the trigger of coverage. The trigger of coverage refers to the concept of determining which insurance policies, if any, cover a particular loss. The author shall conduct an investigation on the regulations and laws relevant to compensation for asbestos-related diseases. The author shall also explore and assess legal developments which have evolved over time through the cases which have been arising. The author also examines the ways in which insurers seek to handle claims and limit their liability. Reference shall be made in particular to policy language, exclusions and applications of policy limits. Inevitably, given the limited local material available in this particular field, the author has conducted research methodologies to gain an insight into the situation in Malta regarding this topic. This was achieved by way of surveys and also an interview with an experienced professional. Asbestos-related diseases are still rising steadily due to the exposure at the height of asbestos use in the 1960's and early 1970's. Although asbestos is still rarely used nowadays, significant amounts still remain embedded in buildings and underground cables. As a result, insurers are currently inundated with claims. Many worry that they may eventually be unable to rely on historical insurance coverage to respond to the rising tide of asbestosrelated claims.