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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
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-
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
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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
Legal and Other Developments
Legal and Other Developments
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.
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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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