September 18, 2000 CLRS 2000 Amy Bouska Susan Cross The Future of Mass Torts

2 Not the Question Can there be another pollution? which is the same as: Can Congress and/or state legislature enact laws that are not well thought out? Particularly involving: high costs large affected population retroactive liability strict liability joint & several liability

3 The Question Can there be another asbestos? What’s the next asbestos?

4 Size of the Question AsbestosPollution Tillinghast estimated ultimate US industry costs:$ B$ B 12/99 per AM Best 31B* 30B Unrecognized:$ B$0 - 10B *including Fibreboard

5 Asbestos Characteristics Large underlying costs ($100B+) Many exposed policies Hospitable judicial arena

6 Asbestos Characteristics Large underlying costs require: Large exposed population  OK: larger population spread over a shorter time  Better: smaller population spread over a longer time Serious results acknowledged to be closely related to exposure (“signature diseases”) Significant inclination to sue  facilitated by labor unions for asbestos

7 Asbestos Characteristics Exposed policies increase with: Lack of exclusions (increased by long latency) Greater “spillover” (which avoids exclusions) “Receptive” policy terms:  low SIRs/deductibles  guaranteed cost policies  occurrence policies Intra-defendant / insurer litigation

8 Asbestos Characteristics Judicial arena worsens with: Accepted litigiousness Lack of tort reform (statutes of limitation, limits on joint & several, etc.) Contingent legal fees

9 Changes since Asbestos Underlying population: (–) better record keeping (to identify class) (+?) earlier risk identification/mitigation by corporations (+) decrease in union influence (…) potential for dangerous / misused products

10 Changes since Asbestos Policies: (+) faster use of exclusions (??) (+) higher SIRs/deductibles (+) more retro-rated/fronted programs (+) greater clarification of “occurrence” (e.g., claims- first-made) (+) improved claims management

11 Changes since Asbestos Judicial system: (–) available “venture capital” from asbestos & tobacco for lawyers (?) increased use of class actions (+) earlier use of class actions (+) greater intra-industry co-operation (+) some tort reform (+) ADR

12 Class Actions Negatives: “lawyers get high fees, plaintiffs get coupons” cases “forced settlements” by insurers due to defense cost exposure Positives: early identification / better case management faster & more economical resolution

13 Contenders EMF (+) no signature diseases / weak correlation (if any) Tobacco (+) significant early policy exclusions (+) little union involvement (+) assumption of risk defense (–) strong disease correlation (–) potential for spillover (–) high class action potential

14 Contenders Lead (+) little union involvement (–) clear test for exposure (+/–) ultimate loss to exposed person unclear (+) mitigation underway (+) use of lead exclusions, although not universally

15 Conclusion Overall, changes since the advent of asbestos are positive, and we don’t see anything on the horizon that is a real contender. Will there be another asbestos? We think that is it is unlikely, but anything is possible.