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NU Online News Service, Feb.1, 1:48 p.m. EST
A United Kingdom actuaries' organization, doubling previous calculations, now estimates insurers there could face asbestos-related claims of £10 billion ($16 billion) in the next 40 years.
The findings by the UK Asbestos Working Party, concerning mesothelioma cancer claims related to asbestos, were noted in Moody’s Weekly Credit outlook, which said the new estimate has potentially negative implications for UK property and casualty insurers.
For the period 2009-2050 employers liability insurance policies could face £10 billion in claims and for the period 2009-2040 the Working Party put the figure at £8 billion ($13 billion), almost double what it estimated in 2004, Moody’s Investors Service said.
This revised estimate, according to the rating service, could lead a number of those with UK asbestos exposure to conclude that they face the prospect of having to pay more claims than previously expected over the next 30 or so years. If so, this will prompt an increase in asbestos provisions that, in turn, will impact profitability, said the report by Moody’s Vice President Dominic Simpson.
Mr. Simpson wrote, however, that “the immediate credit implications for UK insurers are not material because the UK p&c sector is well diversified and has the ability to lay off some of the exposure on reinsurance.
But the report cautioned that there “remains the risk that asbestos-related claims costs could spiral upward over the longer term. Such costs are notoriously difficult to estimate, which is perfectly illustrated in the United States where the number and magnitude of asbestos claims have increased over time.”