2013 UK Asbestos Working Party Asbestos Update b5 Update Asbestos and Deafness Working Parties...

8/14/2019 2013 UK Asbestos Working Party Asbestos Update b5 Update Asbestos and Deafness Working Parties Updated

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Update from UK asbestos anddeafness working partiesRobert Brooks, Brian Gravelsons andGabriela Macra

02 May 2013

Agenda

Update from the UK asbestos working party

Recap on 2009 UK Asbestos Working Party Projections

Legal and Other Developments

Update from the UK deafness working party

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UK Asbestos

Background and Introduction

Background and IntroductionMesothelioma experience

4,000

4,500

1,000

1,500

2,000

2,500

3,000

3,500

D e a

t h s

/ C l a i m s

0

HSE (non-clearance) Gross-up claims (AWP 2004)Gross-up claims (AWP 2007) Observed deaths

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2009 UK Asbestos Working Party Estimates Approach Data

Number of claims

Sample of claimant settlementcosts of mesothelioma claims

CRU and IIDB

Expert judgement based ondiscussions with

other

Developed own models

Judgement

Average costs (includinginflation)

Claims handlers NHS / Doctors

Legal profession

Special interest bodies

Developed own model formesothelioma

Judgement

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2009 UK Asbestos Working Party EstimatesTotal Insurance Market Estimates

16,000

18,000

Insurance Market cost estimate of

6,000

8,000

10,000

12,000

14,000

o s

t o

f a

l l t y p e s

( m

)

Inflation scenario 1

Inflation scenario 2Inflation scenario 3

. .

-

2,000

4,000

Number scenario 1 Number scenario 2 Number scenario 3

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2009 UK Asbestos Working Party EstimatesMesothelioma Deaths and Claimants

2,000

2,250

t s

750

1,000

1,250

1,500

1,750

l i o m a m a

l e d e a

t h s

/ c

l a i m a serve ma e ea s ages

20-89)

HSE / HSL (2009)

AWP1 - 2009

Observed Insurance Claimants(inc Government)

0

250

500

1 9 8 5

1 9 8 8

1 9 9 1

1 9 9 4

1 9 9 7

2 0 0 0

2 0 0 3

2 0 0 6

2 0 0 9

2 0 1 2

2 0 1 5

2 0 1 8

2 0 2 1

2 0 2 4

2 0 2 7

2 0 3 0

2 0 3 3

2 0 3 6

2 0 3 9

2 0 4 2

2 0 4 5

2 0 4 8

M e s o t h e

Scenario 23 - InsuranceClaimants (inc Government)

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UK Asbestos

Experience since 2008


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Actual vs. Projected ExperienceMesothelioma deaths3,000

AWP (2009) Adjusted HSL

1,000

1,500

2,000

2,500 model AWP (2009) Latency model

AWP (2009) Alternative birthcohort modelHSL Non-clearance (2009)

HSL (2010) - Revised riskmodel R1

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0

500

HSL (2010) TSCE T2

Observed deaths (ages 20-89)

Actual vs. Projected ExperienceMesothelioma: Number of claims

3,000

s

1,000

1,500

2,000

2,500

o f m e s o

t h e l

i o m a c

l a i m

( e x c

l u d i n g n

i l s

)

2012 SurveyScenario 23

12

0

500

2009 2010 2011

N u m

b e

2012 survey data assuming the survey covered 80% and nil rate of 23%


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Actual vs. Projected ExperienceMesothelioma: Average cost of claims120,000

i m s

40,000

60,000

80,000

100,000

o s

t o

f m e s o

t h e

l i o m a c

l a

( e x c

l u d i n g n

i l s

)

Actual Incurred Actual SettledScenario 23

13

-

20,000

2009 2010 2011

A v e r a g e c

2012 survey data assuming a nil rate of 23%

Actual vs. Projected ExperienceLung Cancer: Number of claims

600

200

300

400

500

r o

f l u n g c a n c e r c

l a i m s

( i n c

l u d i n g n

i l s

)

2012 SurveyNumber 2 / Cost 2

14

0

100

2009 2010 2011

N u m

b

2012 survey data assuming the survey covered 80%


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Actual vs. Projected ExperienceLung Cancer: Average cost of claims70,000

s

30,000

40,000

50,000

,

c o s

t o

f l u n g c a n c e r c

l a i

( i n c

l u d i n g n

i l s

)

Actual Incurred Actual SettledNumber 2 / Cost 2

15

-

10,000

,

2009 2010 2011

A v e r a g e

2012 survey data assuming a nil rate of 33%

Actual vs. Projected ExperienceTotal costs 2009 to 20111,200m

200m

400m

600m

800m

,

0mMesothelioma Lung cancer Asbsetosis Plueral Thickening

Projected (Scenario 23 & Cost 2 / Number 2)Incurred (Grossed up in 1Q 2012 Survey)Notified in year * Settled in year (Grossed up 1Q 2012 Survey)

162012 survey data assuming the survey covered 80%


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UK Asbestos



ELTO

r gger ga on

Jackson

International Energy Group Ltd v Zurich Insurance plc [2013]

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Legal and Other DevelopmentsPleural plaques

House of Lords ruled pleural plaques were not compensable (Oct 2007)

Scotland

Scottish Parliamentintroduced a bill toreverse the House ofLords ruling in Scotland -in force from June 2009

Insurers appeal washeard in July 2010

England and Wales

Government announced itwill not be legislating tomake PP claimscompensable

Extra-statutory Paymentsof 5,000 for unresolvedcases

Northern Ireland

Consultation paperpublished by Dept ofFinance and Personnel(NI) Oct 2008;recommended claimsmade compensable

The Damages (Asbestos-

12th October 2011, theSupreme Court rejectedthe insurers' appeal

related Conditions) Act(Northern Ireland)2011 came into operationon 14th December 2011

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Legal and Other DevelopmentsEmployers Liability Trigger Litigation Seeking to clarify what triggers a policy to pay a claim to

victims of mesothelioma

Bolton Metropolitan Borough Council v MMI and CU Public liability policies

Injury occurring wording

Durham v BAI (run-off) and others (Trigger Litigation)

mp oyers a y po c es

Injury sustained or disease contracted wording

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Legal and Other DevelopmentsTrigger Litigation: Court of Appeal Judgement Court of Appeal judges took divergent approaches

o ow ng pr nc p es emerge Sustained wording policy responds when tumour starts to develop

Contracted wording synonymous with caused, policy responds toexposure

Policies post 1972 (when EL became compulsory) will meetmesothelioma claims based on date of inhalation

Leave to appeal to the Supreme Court was granted Recommended that this appeal be expedited

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Legal and Other DevelopmentsTrigger Litigation: Supreme Court On the 28th March 2012 the Supreme Court handed down its

ud ment based on a 4-1 ma orit :

Reflecting the wider commercial purpose of employers' liability cover,that disease is said to have been "sustained" or "contracted" in an

employers' liability policy when it is caused and not when the diseasemanifests itself many years after the exposure

Applying the principles established in Fairchild

'regardless of wording (unlike public liability policies)

Return to the basis used prior to the litigation

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Legal and Other DevelopmentsJackson reforms A10 year review looking into the costs in civil litigation

com leted b Lord Justice Jackson in Januar 2010

After consultation UK Government published its response inMarch 2011

They agreed to implement the majority of reforms within theJackson review

- ,and Punishment of Offenders Act 2012 (LASPO)

LASPO came into force on 1 April 2013

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Legal and Other DevelopmentsJackson reforms Success fees payable on CFAs and ATE premiums no longer

recoverable from the losin art

The winner must therefore pay its lawyers' success fee

This could render some claims uneconomic to pursue

Court of Appeal guidance after Simmons v Castle [2012] -General damages in all civil claims 10% higher

-claimants Agree to accept a share of their clients' winnings

Maximum cap of 50%

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Legal and Other DevelopmentsJackson reforms Additional penalty on unsuccessful defendants under Part 36

Capped on large awards

File disclosure reports listing potentially relevant documents

File budgets for approval by the court and other parties

Exclusion of mesothelioma claims from the reforms

After-the-event insurance and success fees still apply

Lord Chancellor investigating

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Legal and Other DevelopmentsINE v Zurich Insurance plc [2013] Claimant died from mesothelioma

xpose o as es os n uernsey rom o .

Guernsey law applied: UK Compensation Act 2006 did not

apply INE settled claim for damages and then sought recovery from

the insurer

mp oyers a y po c es prov e o

Commercial Court ruled insurer's liability under an EL policylimited to period under which the claimant had been insured

Insured appealed this verdict28


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Legal and Other DevelopmentsINE v Zurich Insurance plc [2013] Court of Appeal ruled in February 2013

nsurer o prov e a comp e e n emn y On risk for 6 out of the total of 27 years of exposure

Basically an All Sums verdict

Followed the approach of the Supreme Court in the Trigger litigation - mesothelioma was "caused" by his exposure

No contribution by solvent insured to insurer - contrary to the ABI guidelines

Supreme Court?

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UK Deafness


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UK DeafnessIntroduction Why are UK Deafness claims a current issue?

What are noise induced hearing loss claims?

A claims history lesson

What is driving the recent claims experience?

UK Deafness Working Party GIRO Paper31

100,000

120,000

Why is i t a Current Issue?

20,000

40,000

60,000

80,000

Data source: Deafness Working Party Data Survey Sept 2012, with 2012 updated from March 2013 survey. Survey covers 12 marketparticipants in last 10 years, fewer in earlier years, history has been rescaled to be consistent across all years.

-

Total Number of Insurance Claims Notified

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What are Noise Induced Hearing Loss (NIHL)Claims? Hearing loss arising from prolonged exposure to high noise levels almost always in the

work place and therefore impact Employers Liability policies a es emp oyers eeme o e aware vary y n us ry ey a e o now e ge s Successive regulations in 1989 and 2005 reduced actionable noise levels and stipulated

employer actions (noise surveys, reduction, protection etc.) Serious cases involve tinnitus alongside hearing loss Latency arises because NIHL becomes apparent around age 60-65 when hearing

typically starts to deteriorate through age Current claims predominantly from 1970s to 1980s exposures

UK Insurance industry is currently paying around 50m per year based on working partydata

Major component of claim cost is claimant solicitor fees with damages only representingaround one quarter of total spend

Similar mix of insurer compensators as asbestos

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100,000

120,000

Impact of 1989regulations and

recession

i i i

UK Deafness Claims History Lesson

20,000

40,000

60,000

80,000

Economy recovers,trade union influence

reduces

CFAs introduced April 2000

Test Litigation,Textile Industry

targeted

Rise of CMCs andfurther recession

Risingunemployment in

early 1980s

Data source: Deafness Working Party Data Survey Sept 2012, with 2012 updated from March 2013 survey. Survey covers 12 marketparticipants in last 10 years, fewer in earlier years, history has been rescaled to be consistent across all years.

-

Total Number of Insurance Claims Notified

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What is Driving Recent Experience?Legislation The impact of LASPO (April 2013) is likely to have fuelled an increase in claimant solicitor

ac v y

Claims Management Compani es (CMCs) Claims Management Companies have increased rapidly from a couple of hundred to a

couple of thousand* over the last five years Significant increase in advertising raising awareness in the general population of the

potential to make a claim After the Event (ATE) insurance allowed solicitors to run a case risk-free if the ATE

*Source: Motor Third Party Working Party

Recession Impact of recent recession has increased unemployment, albeit mainly at younger ages Redundancy has historically been a trigger to make a claim against

an employer

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UK Deafness Working Party Paper for GIRO2013Includes

deafness claims experience Market data collection and survey results Analysis of influencing factors Key items for the reserving actuary to consider

Does Not Include Insurance Market Projections

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Questions Comments

The views expressed in this presentation are those of the presenter

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2013 UK Asbestos Working Party Asbestos Update b5 Update Asbestos and Deafness Working Parties...

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