The estimated future cost of UK asbestos-related claims could reach £11 billion, according to new figures from the Actuarial Profession’s UK Asbestos Working Party (AWP). The estimate is almost double the projections originally put forward by the group.
According to the AWP, the increase is due to an unexpected rise in the proportion of people diagnosed with an asbestos-related condition making a claim. The group also warns that so much uncertainty surrounds the estimate, that the actual outcome could be significantly higher or lower.
In general terms, the report predicts that the future cost to the insurance industry of asbestos-related claims will be around £11 billion for the period 2009 to 2050. This compares with the AWP's 2004 estimate of £4.7 billion - although this figure was based on estimated costs up to 2040 only.
The AWP is careful to list the changes it has made to its projection model since the earlier research was carried out. This includes taking account of the Health and Safety Executive’s revised projections of the number of future deaths from mesothelioma in Great Britain, released in 2009.
The report reveals that around 90% of the estimated £11 billion relates to mesothelioma claims, and that most of the increase in costs since 2004 can be explained by a rise in the proportion of people with mesothelioma making compensation claims.
This proportion has risen from around one-third in 2004 to almost two-thirds – an increase that was not anticipated in 2004, and has only become evident in recent years. The AWP reckons that there a number of factors behind the increase, including;
- increased media publicity, creating greater public awareness of the fact that compensation might be available;
- more people using the internet to research their condition and to find out what help is available;
- a greater level of support being available for patients through the NHS National Mesothelioma Framework, and
- the possibility that the greater awareness of mesothelioma is leading to an increase in the number of retrospective claims by family members, even where the death certificate does not refer to mesothelioma.
Other relevant changes to the projection model include a higher number of asbestos-related lung cancer claims than previously expected, and fewer than expected claims for pleural thickening.
The report does not take into account any amounts in relation to asymptomatic pleural plaques, which are no longer compensatable in England and Wales. They are now compensatable in Scotland, following the introduction of the Damages (Asbestos-related Conditions) (Scotland) Act, and there are moves afoot to bring similar legislation into the rest of the UK.
Speaking on behalf of the working party, its Chairman, Brian Gravelsons said: “Insurers will of course have already noticed the increased number of claims from mesothelioma sufferers, so these developments won’t be a surprise to them. However, the working party’s projections will provide the insurance industry with a consistent reference point to help it assess its asbestos liabilities.”
“There is still considerable uncertainty surrounding the future cost of asbestos claims" he explained, "as the number of people that will be diagnosed with mesothelioma many years into the future cannot be accurately predicted. The working party will continue to monitor the emerging experience and update its projections accordingly.”
Report (256-page PDF)
http://www.actuaries.org.uk/__data/assets/pdf_file/0008/165086/B12AsbestosWP.pdf
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