Companies fear asbestos claims crisis

Two-hundred and fifty of the world’s largest companies will today petition the US Supreme Court in an attempt to halt a new asbestos compensation crisis that will claim a record number of bankruptcies this year, the Financial Times (FT) has reported (www.ft.com).According to the FT article (by Dan Roberts, London), “the group, which includes General Electric and Ford in the US and Royal Dutch/Shell and Ericsson in Europe, fears a trial in West Virginia involving 8,000 claimants will cost them hundreds of millions of dollars if it proceeds on September 23.””The asbestos time bomb has begun to register with corporate defendants who face 200,000 existing claims in the US alone.” The FT reports it’s own investigation has found that many are still underestimating their future liabilities. Actuaries estimate that asbestos-related cases will cost companies and their insurers $200bn-$275bn (130m-175m) in the US and between $32bn and $80bn in Europe.Also outlined in the FT article is that, “increased provisions have recently been made by ABB, the Swiss-Swedish engineering group, and Halliburton, the US oil services company. Yet these have been based primarily on medical forecasts of the number of victims rather than recognizing the ability of lawyers to win compensation for people who only have the potential to become sick. These cases caused nine bankruptcies last year and 11 so far in 2002.””The long period before some asbestos-related illnesses become visible has encouraged lawyers to find a new generation of potential victims who are overwhelming US courts. Legal breakthroughs in France, Britain and the Netherlands are set to allow a similar explosion in European cases.”The FT reports, “The bankruptcies and lost jobs from asbestos far outweigh the effects of Enron or WorldCom but it’s happening very slowly and it’s difficult to get people’s attention,” said David Austern, an administrator for Johns-Manville, one of the earliest asbestos companies to have gone bust. “The insurance industry is scared,” said Leigh Anne Pusey of the American Insurance Association. “This is a huge, huge potential liability and no one knows where the outer limit lies.”