Annual Report 2005 - Chubb Group of Insurance Companies

theory, insurance coverage is deemed to be triggered from the time a claimant is Ñrst exposed to
asbestos until the manifestation of any disease. This interpretation of a policy trigger can involve
insurance companies over many years and increases their exposure to liability.
New asbestos claims and new exposures on existing claims have continued unabated despite the
fact that usage of asbestos has declined since the mid-1970's. Each claim Ñling typically names dozens
of defendants to ensure that there is a solvent company left in the group to eventually pay claims. The
plaintiÅs' bar continues to solicit new claimants through extensive advertising and through asbestos
medical screenings. New asbestos cases are often Ñled in those jurisdictions with a reputation for
judges and juries that are extremely sympathetic to plaintiÅs. A vast majority of asbestos bodily injury
claims are Ñled by claimants who do not show any signs of asbestos related disease.
There have been several recent positive events in the asbestos environment:
‚Various challenges to mass screening claimants have been mounted, including a June 2005
U.S. District Court decision in Texas that accused plaintiÅs' lawyers of Ñling claims for people
who had not been properly diagnosed with silicosis. Among the repercussions of that ruling,
several asbestos injury settlement trusts have refused new claims that were based on the
diagnosis of physicians or screening companies named in the case. Further investigations of the
medical screening process for asbestos claims are underway.
‚Anumber of key jurisdictions have adopted venue reform that requires plaintiÅs to have a
connection to the jurisdiction in order to Ñle a complaint.
‚Since 2004, several states have enacted laws that set medical criteria that must be met for
plaintiÅs to proceed with their claims. Other states have medical criteria bills pending. While
this legislation is being challenged in certain of these states, it appears that these laws are
already impacting the Ñling of claims by unimpaired plaintiÅs. A related positive development
has been the implementation by several states of inactive dockets, which preserve the rights of
unimpaired claimants but do not provide for payments to these claimants unless they meet
medical criteria.
To date, approximately 75 manufacturers and distributors of asbestos products have Ñled for
bankruptcy protection as a result of asbestos related liabilities. Certain of these manufacturers and
distributors have utilized a practice referred to as a prepackaged bankruptcy, which involves an
agreement to a plan between the debtor and its creditors, including current and future asbestos
claimants. Although the debtor is negotiating in part with its insurers' money, insurers are generally
given only limited opportunity to be heard. In recognition that many aspects of prepackaged
bankruptcy plans are unfair to certain classes of claimants and to the insurance industry, these plans
are beginning to be closely scrutinized by the courts and rejected when appropriate.
Our most significant individual asbestos exposures involve products liability on the part of ""traditional''
defendants who were engaged in the manufacture, distribution or installation of asbestos products. We wrote
excess liability and/or general liability coverages for these insureds. While these insureds are relatively few in
number, their exposure has increased in recent years due to the increased volume of claims, the erosion of
much of the underlying limits and the bankruptcies of target defendants.
Our other asbestos exposures involve products and non-products liability on the part of ""peripheral''
defendants, including a mix of manufacturers, distributors and installers of certain products that contain
asbestos in small quantities and owners or operators of properties where asbestos was present. Generally,
these insureds are named defendants on a regional rather than a nationwide basis. As the financial
resources of traditional asbestos defendants have been depleted, plaintiffs are targeting these viable
peripheral parties with greater frequency and, in many cases, for larger awards.
Asbestos claims against the major manufacturers, distributors or installers of asbestos products
were presented under the products liability section of primary general liability policies as well as
under excess liability policies, both of which typically had aggregate limits that capped an insurer's
exposure. In recent years, a number of asbestos claims by insureds are being presented as ""nonproducts''
claims, such as those by installers of asbestos products and by property owners or operators
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