Environmental and asbestos liabilities: A growing concern for the insurance industry

Abstract

Environmental and asbestos liabilities area growing concern for the insurance industry. Asbestos claims began to emerge in the 1960s, the enactment of Superfund in the 1980s prompted the emergence of environmental claims. These types of claims are made against policies sold decades before. Although the ultimate costs of asbestos and environmental liabilities are unpredictable, current dollar estimates for the insurance industry are in the billions. In an effort to quantify these liabilities and document the various loss reserving methods used, insurance regulators have developed disclosure requirements. These disclosure requirements are expected to be an invaluable tool to insurance regulators as well as to insurance companies and rating agencies.