Often overlooked are the insurance issues related to asbestos and the degree to which the asbestos mass tort has changed the face of liability insurance and liability insurance law. The asbestos mass tort brought insurance coverage litigation into the big leagues of litigation, adjudication, and scholarly examination (although even the most rabid insurance coverage junkie would concede this is not much silver lining to the asbestos cloud). But after 30 years of big-time liability insurance coverage litigation involving asbestos or influenced by asbestos, what is the outcome? My assessment is:
1. Despite their protestations, insurers have not been unfairly treated by the judiciary's adjudication of asbestos-related insurance matters, although their success in public relations has left many with the impression that the insurance industry was handed too stiff a tab due to the legal system's desire to maximize available compensation for the asbestos mass tort;
2. Insurers themselves, in designing the comprehensive or commercial general liability (“CGL”) policy that has been the focus of so much insurance coverage disputation, willingly took on the asbestos coverage risk, even if they did not specifically anticipate or fully appreciate the exposure they had embraced;
3. Insurers have survived the asbestos mass tort to date and will, when the final tally is finally tallied, have weathered the financial aspect of the asbestos storm quite well;
4. With all its faults, the asbestos mass tort has significant traits tending to advantage insurers. Adjudication and payment of the claims has extended over decades, postponing payment. This allows insurers to garner years of investment income and to pay claims in dollars whose real value has been substantially reduced by inflation. By contrast, other catastrophes such as Hurricane Katrina and September 11 require insurers to pay covered claims within a relatively short time frame in which the insurer gets far less benefit from either investment income or the effects of inflation;
5. In spite of the limited adverse impact of asbestos upon insurers, the insurance industry has successfully portrayed itself as a victim not only of the asbestos mass tort but also of judicial decisions favorable to policyholders. This in turn has made the judiciary more receptive to insurer arguments against coverage, in both asbestos and non-asbestos matters; and
6. The asbestos mass tort provided insurers with something of a baptism of fire for modern liability exposures and has enabled the insurance industry to structure its products and behavior in a manner reducing its future exposure. Although there may someday be a “next asbestos” for tort law, there will not likely be a next asbestos for the insurance industry.
12 Conn. Ins. L.J. 349 (2006).
Stempel, Jeffrey W., "Assessing the Coverage Carnage: Asbestos Liability and Insurance After Three Decades of Dispute" (2006). Scholarly Works. Paper 229.