IAAust Asbestos Working Group Discussion Paper

Transcription

1 IAAust Asbestos Working Group Discussion Paper Prepared by the Asbestos Working Group: Andrew Huszczo, Peter Martin, Siddharth Parameswaran, Craig Price, Andrew Smith, Donna Walker, Bruce Watson (Chair), Guy Whitehead Presented to the Institute of Actuaries of Australia Accident Compensation Seminar 28 November to 1 December 2004 This paper has been prepared for the Institute of Actuaries of Australia s (IAAust) Accident Compensation Seminar, The IAAust Council wishes it to be understood that opinions put forward herein are not necessarily those of the IAAust and the Council is not responsible for those opinions Institute of Actuaries of Australia The Institute of Actuaries of Australia Level 7 Challis House 4 Martin Place Sydney NSW Australia 2000 Telephone: Facsimile: insact@actuaries.asn.au Website:

2 Introduction The Asbestos Working Group was formed to prepare a discussion paper for the tenth Accident Compensation Seminar, on behalf of the Accident Compensation Sub- Committee of the Institute s General Insurance Practice Committee. The objectives of this paper are to: create a reference document of data and sources of information on asbestos diseases and the related cost of compensation in Australia, including information which has been presented at previous Institute seminars as well as more recent developments record current actuarial thinking and practice in estimating and providing for the cost of asbestos-related disease compensation and to identify the main sources of uncertainty, and stimulate further research and sharing of information in this field. In this paper we have not tried to develop a single preferred basis for projecting future asbestos liabilities nor to propose any policy position on compensation. Membership of the Working Group represents a broad cross-section of actuaries with interest and experience in this area, including actuaries from four insurance companies, three consulting firms and government. The Working Group also sought information and input from actuaries from other organisations who were interested in the paper but unable to participate in the Group at the time. A paper written by a committee will almost inevitably contain inconsistencies in style and content which reflect the different authors. We have endeavoured to achieve consistency on important content issues and we hope that any remaining inconsistencies in the paper are relatively minor. The Working Group s members thank the various people who have assisted us in providing content and reviewing draft sections. We acknowledge in particular Clive Amery who has attended Working Group meetings and reviewed the paper on behalf of the Institute and the Practice Committee. IAAust Asbestos Working Group Discussion Paper (December 2004)

3 IAAust Asbestos Working Group Discussion Paper 1 Asbestos 1 2 Asbestos Usage in Australia 2 3 Asbestos Related Diseases 10 4 Data sources 13 5 Compensation and Insurance 20 6 Projections 27 7 Reserving for Asbestos Related Liabilities 36 Appendices Abbreviations 43 References 44 IAAust Asbestos Working Group Discussion Paper (December 2004)

4 1 Asbestos 1.1 What is Asbestos? Asbestos is a naturally occurring mineral that is fibrous in nature. In chemical terms, it is a compound of magnesium/sodium silicates. Asbestos is ubiquitous, found in two thirds of the rocks in the earth s crust. Asbestos was used extensively in the building and shipbuilding industries due to its unique incombustible characteristic as well as its resistance to chemical breakdown. It is flexible, strong and durable. Asbestos was mainly used as a heat and fire retardant and has also been used to make a wide variety of products such as filters, cements, construction materials, friction products and clothing. 1.2 Asbestos Varieties and Relative Toxicity There are many different types of asbestos fibres and all are unsafe for humans. The two main categories of asbestos fibres are amphibole and serpentine fibres. Amphibole fibres include crocidolite (commonly known as blue asbestos), amosite (commonly known as brown/grey asbestos), actinolite, anthophyllite and tremolite. These fibres are extremely hazardous when suspended in the air and inhaled. Once in the human body, they can remain indefinitely in the lung tissue with minimal elimination over time because they are more rigid and less soluble. Serpentine fibre is chrysotile or white asbestos. These fibres are less harmful compared with amphibole fibres and once in the human body the immune system may eliminate them by normal physiological processes. The three most widely used asbestos varieties in Australia were chrysotile, amosite and crocidolite which will be referred to as white, brown, and blue asbestos respectively throughout this paper. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 1

5 2 Asbestos Usage in Australia 2.1 History In Australia, asbestos has been in commercial use since At that time, large asbestos companies had succeeded in weaving white and blue asbestos fibres for commercial use. Asbestos was mainly used in: Insulation e.g. lagging for pipes and boilers Fire-proofing e.g. fire doors Asbestos cement e.g. roofing, flues and wall cladding Friction materials e.g. brake linings Textiles e.g. cloths, fire blankets White asbestos was mined more than blue asbestos up until the commencement of mining at Wittenoom where blue asbestos dominated the production. After the Wittenoom production ceased, white asbestos production increased again. Commencement of blue asbestos mining in the Hammersley Ranges, Western Australia, began in the 1930s. The first major mining took place in 1939 at Yampire Gorge but moved to Wittenoom Gorge in This mining site had been discovered by Lang Hancock. However he was bought out by the CSR subsidiary, Australian Blue Asbestos Pty Ltd, in From 1950 until the early 1960s Wittenoom was Australia s only supplier of asbestos. It eventually closed in 1966 because it had become uneconomic. According to the paper published by Berry in 1991, the number of exposed workers at Wittenoom between 1943 and 1966 is estimated to be 6916 in total, including 6505 men and 411 women. There were two mines which produced white asbestos, namely Baryulgil in Grafton NSW and Woodsreef east of Barraba in NSW. The mines at Baryulgil operated from 1942 until closing in 1979; the Woodsreef mine was in operation between 1970 and The reasons attributable to the closures were financial difficulty and the health concern of workers at Wittenoom. From the 1960s until the mine closures in 1983, NSW produced the largest tonnages of white asbestos in Australia. The following graph shows the production, import, export and consumption of asbestos in Australia. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 2

6 Figure 2-1 Asbestos in Australia Asbestos Production, Trade, & Consumption (Australia) Metric Tons Years Production Imports Exports Consumption Source: Worldwide Asbestos Supply and Consumption Trends from 1900 to 2000, Virta [2003]. Note that the time scale is not uniform. The data are snapshots for each of the years rather than cumulative amounts for the time band. There is further data in Leigh and Driscoll [2003]. From the above graph, two peaks are noticeable in the production of asbestos. The first peak in 1960 corresponds to the production of blue asbestos at Wittenoom. The second peak in 1980 corresponds to the production of white asbestos in Baryulgil and Woodsreef mines in NSW. Not surprisingly, the export of asbestos follows the production pattern. In the 1950s and 1960s, most of the asbestos was exported to the USA and Italy. In the 1970s and 1980s, most was exported to Japan and Thailand. Consumption was driven by imports and to a lesser extent production net of exports. Consumption peaked in 1975 whereas production peaked around The earlier peak in consumption of asbestos products can be explained by the fact that most of this production was exported. In regards to imports, most of the white asbestos was imported from Canada while the blue and brown asbestos were imported in much lower quantities from South Africa. The decrease from the 1980 s reflects the fact that not only had use of brown and blue asbestos been banned in Australia but that the importation of white asbestos was on the decline. The use of white asbestos was however not prohibited and it continued to be used. At the turn of the millennium, Australia imported 1,500 to 2,000 tonnes of white asbestos per year. Australia also imported many manufactured asbestos products. The main sources of supply were the UK, USA, Germany and Japan. The Australian Mesothelioma Register Report (NOHSC [2003]) states that over 60% of all production and 90% of all consumption of asbestos fibres were used by the asbestos cement manufacturing industry. Much of this industry output still remains in service today in the form of fibro houses and water and sewerage piping. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 3

7 Australia was the fourth largest consumer of asbestos cement products in the Western world in 1954, after USA, UK and France. On a per capita basis, Australia had the highest per capita usage of asbestos in the world. This has been reflected by the highest per capita incidence of mesothelioma in the world. Significant amounts of blue, brown and white asbestos remain in installations and exposure can and still occurs. About one third of houses built in the period used asbestos-containing products. 2.2 Major Exposure Sources In Australia, there are five separate stages of exposure which can give rise to asbestos related diseases (ARDs). All asbestos related activities go through the following cycle (referred as the asbestos life-cycle): 1. Production (Mining and milling of fibre) 2. Product manufacturing 3. Deployment of products into the environment 4. Ongoing environmental exposure 5. Removal and demolition These stages in the asbestos life-cycle happened (and are still happening) at different times, some are perhaps quite closely related and others far apart in time. In addition, the levels of exposure and hence the asbestos related disease incidence rate, latency period, etc. may vary. The following graph provides an illustration of the asbestos life cycle showing that the exposures in some stages (such as mining) are short but very intense but others (such as environmental exposures) are low in intensity but occur over extended periods. The graph illustrates that there is a strong link between the nature and intensity of the underlying exposure to asbestos and the potential disease and compensation claim emergence from that exposure. Claims incidence is discussed in more detail later in this paper but we feel it is important at this point to draw attention to the links between different exposures in the life cycle and claims emergence. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 4

8 Figure 2-2 Conceptual diagram of ARD claim emergence The Asbestos Life-cycle Mining Numbers of Claims Manufacture Deployment Environmental Exposure Removal Time In general, we can state that aggregate incidence patterns drawn from a range of historical exposures will be more spread out than the pattern for any one exposure stage in the life cycle, and the peak of subsequent claims incidence may well occur later than that for the early stages of the life cycle. The graph above is intended to show the relative timing of the life cycle. The relative heights of the graphs may not be indicative of the relative numbers of claims that will actually emerge. According to the Australian Mesothelioma Register Report, there are a number of different vocations that have given rise to a large number of mesothelioma victims. These include miners, carpenters, builders, asbestos products manufacturers, power station workers, etc. Companies which made or installed asbestos-containing products, including a number of government departments and agencies, may have a financial obligation to compensate people for diseases arising from historical exposure to asbestos. Some of this liability was transferred to the insurance industry through public liability and workers compensation policies. The concept of the asbestos life cycle is of particular importance to actuaries involved in setting reserves for ARD liabilities as different insurers are likely to have exposure at different stages of the cycle, which would impact the estimation and management of asbestos liabilities. For example, for an insurance portfolio covering manufacturing and deployment exposures, the application of curves drawn from epidemiological studies of early stages of the life-cycle would, in general, be inappropriate for use without adjustment, as they will predict an earlier peak and may (if claims emerge from later stages of the life-cycle) result in too rapid a decay in claims incidence. Further discussion on claims projections and epidemiological studies are included in Section 6 of this paper. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 5

9 2.3 OH&S Legislation and Practice Australia was at the forefront of introducing strict OH&S standards. It is likely that this will, to an extent, offset the future disease incidence arising from a later peak in asbestos consumption in Australia than some other countries around the world. The National Health and Medical Research Council (NHMRC) had played an active role in dealing with the occupational health aspects of asbestos in Australia until In 1978, NHMRC approved the establishment of an Asbestos ad hoc Subcommittee to address the occupational and public health issues of asbestos. Upon the recommendations of this Subcommittee, the following exposure standards for asbestos were adopted in 1981: Brown asbestos 1 fibre/ml White asbestos 1 fibre/ml Blue asbestos and mixtures 0.1 fibres/ml. The NHMRC also recommended that the importation and mining of raw blue asbestos fibre and its use in new work be prohibited in Australia. In October 1983, NHMRC reviewed the carcinogenicity of brown asbestos and recommended that it also be restricted to an exposure level of 0.1 fibres/ml and that it too be prohibited from importation. This coincided with the commencement in 1983 of Occupational Health and Safety legislation, placing a limit on acceptable exposure levels in the workplace. These standards represented a downwards revision by a factor of about 300 from the time-weighted average recommended back in A Code of Practice for the safe removal of asbestos was introduced in 1988, and was updated further in In 1991, Australian Standards 1715 and 1716 prescribed correct protective clothing to be worn in areas where asbestos existed. Victoria introduced new regulations in 1992 lowering exposure standards but no provision was made for a change of production levels. National model regulations in 1994 were produced for the control of hazardous workplace substances including asbestos, and these prescribed guidelines for the induction and training of workers potentially exposed to it. Business certification became important for high-risk work such as asbestos removal and demolition work, in order to promote safer practices among the businesses involved in these activities. Standards have been periodically released by each of the state-run Workplace Safety authorities, stipulating the requirements for on-site management of asbestos material. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 6

10 On October 17, 2001, the National Occupational Health and Safety Commission (NOHSC), which was established in 1985, resolved to ban the import and use of white asbestos. This was achieved with a ban throughout Australia on 31 December However, the prohibition did not extend to items that are fixed or installed and in use until they are replaced or disturbed. At such time they must be replaced with a non-asbestos alternative. Comparisons are often made between the UK, USA and Australia in regards to both historical exposure and emerging claims incidence. The following table provides a timeline of the introduction of national OH&S standards between the three countries. Table 2-1 Country Year Standards UK 1969 Exposure limit: Australia 1981 Exposure limit: OH&S Legislation and Practice Timeline All asbestos: 2 fibres/ml of air Brown asbestos: 1 fibre/ml White asbestos: 1 fibre/ml Blue asbestos and mixtures: 0.1 fibres/ml The importation and mining of raw blue asbestos fibre and its use in new work was prohibited. Australia 1983 Exposure limit for brown asbestos was amended to 0.1 fibres/ml and the importation of brown asbestos was prohibited UK 1983 Licensing requirement for asbestos work. UK 1987 Exposure limit: White asbestos: 0.5 fibre/ml averaged over a continuous period of 4 hours. All other type of asbestos and mixtures: 0.2 fibres/ml averaged over a continuous period of 4 hours. Use of blue and brown asbestos in high risk activities was prohibited. Australia 1988 Introduction of Code of Practice for the safe removal of asbestos. Australia 1991 Asbestos workers must wear protective clothing. USA 1991 New use of asbestos was banned. USA 1994 Exposure limit: 0.1 fibres per ml averaged over a period of 8 hours. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 7

11 Country Year Standards UK 1999 Use of white asbestos in high risk activities was prohibited. Also the entire European Union has agreed to ban all production of asbestos material from UK 2002 Exposure limit: White asbestos: 0.3 fibres/ml averaged over a continuous period of 4 hours. All other type of asbestos and mixtures: 0.2 fibres/ml averaged over a continuous period of 4 hours. Australia 2003 The import and use of white asbestos was banned. USA 2003 Bill was presented intending to ban most asbestoscontaining products. While there was no national exposure standard for asbestos in Australia until 1981, developments in particular industrial processes greatly reduced the risk of asbestos exposure during the 1960s and 1970s. For example: progressive introduction of control measures from the late 1950s helped reduce dust exposure in the asbestos cement manufacturing industry the mining of blue asbestos ceased in the Royal Australian Navy introduced regulations on safe handling on asbestos during the 1960s, eg the standard Safety of Personnel Exposed to Dust from Materials Containing Asbestos issued in 1968 under Victorian Health Act regulations, the maximum level of asbestos exposure permissible without abatement procedures was reduced in 1970 from 25 fibres/ml (set in 1945) to 2.0 f/ml for white asbestos and brown asbestos and 0.2 f/ml for blue asbestos NSW building unions took strike action in the early 1970s and black-banned the use of asbestos building products production of asbestos thermal insulation products by the Hardie-Bradford Insulation partnership ceased in Australia in 1974 the Whyalla shipyard closed in 1975 spraying of limpet asbestos in the construction industry in NSW ceased in 1976 awareness, regulations and procedures improved in the Latrobe Valley (Victoria) power industry in the late 1970s such that (according to a book by a union advocate) workers entering the industry after 1980 should have been able to avoid exposure IAAust Asbestos Working Group Discussion Paper (December 2004) Page 8

12 Victorian rail workers took industrial action in over the presence of asbestos in Melbourne s trains and underground rail loop, leading to the refurbishment of some trains, the disposal of remaining Harris trains, removal of some asbestos and entombment of other asbestos within existing structures Victoria introduced stringent controls on handling asbestos in the Labour and Industry Act Regulations in 1978, for example all work involving the handling of blue asbestos had to be approved by the Chief Inspector James Hardie s asbestos cement products contained warning labels from 1978 and before this contained instructions on safe handling such as wetting the product when cutting it. (ref: Jackson Report [2004]; NOHSC [2003]; NOHSC website; Wragg [1995]) IAAust Asbestos Working Group Discussion Paper (December 2004) Page 9

13 3 Asbestos Related Diseases 3.1 Types of Asbestos Related Diseases Asbestos is hazardous when the fibres are suspended in the air we breathe. The fibres can be small enough to end up in the air sacs of the lungs. Asbestos fibres can also be swallowed. Once inside the body, the immune system tries to absorb the asbestos fibres in the body. But asbestos fibres are slivers of crystal and cannot be absorbed by the immune system. The immune system s attempts to attack the asbestos fibres can also leave iron deposits and causes the fibres to increase in size. Extensive scar tissue can cause the diseases mentioned below to occur in humans and animals. A series of diagrams is presented throughout this section to show the effect of asbestos related diseases on the lungs. The following is a diagram of a healthy lung for the purpose of comparison. Source: Asbestos Diseases Foundation of Australia Inc. ( Mesothelioma Mesothelioma is a malignant tumour which develops either in the pleura (lungs) or in the peritoneum (abdomen). The pleura is the wrapping tissue between the lung and the chest wall whereas the peritoneum is tissue wrapping the abdomen. A third type of mesothelioma is pericardial which occurs around the heart but is very rare. Mesothelioma is a growing cancer and never reaches a stable state. Pleural mesothelioma usually affects only one lung and tends to produce fluid which may compress the lung. Source: Asbestos Diseases Foundation of Australia Inc. ( IAAust Asbestos Working Group Discussion Paper (December 2004) Page 10

14 These effects can take as little as 15 years or as much as 60 years to develop. They usually take about 35 to 40 years on average. Once diagnosed, patients usually die within 2 years. Increasing exposure to asbestos induces larger numbers of cases of mesothelioma, however mesothelioma can develop from quite limited exposure. Asbestosis Asbestosis is a scarring disorder within the lungs. The scarring is a result of the body trying to repair damage caused to the lungs and in turn causes the tissues to stiffen and shrink. As a result, the lungs can not hold as much air as normal and the transfer of oxygen to the body is not efficient. Asbestosis is not a tumour (ie. it is non-malignant). Source: Asbestos Diseases Foundation of Australia Inc. ( The latency period for asbestosis is between 10 to 40 years with the average being 15 to 20 years. Lung cancer (and other cancers) Lung cancer is a lump of abnormal tissue growing within the lungs. It destroys healthy cells and spreads to other parts of the body. These abnormal cells multiply faster than healthy cells. Source: Asbestos Diseases Foundation of Australia Inc. ( The latency period for lung cancer associated with asbestos exposure is usually between 15 and 35 years. The effects of smoking and asbestos exposure are interactive (multiplicative) on lung cancer risk. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 11

15 Asbestos related pleural diseases (ARPD) Asbestos related pleural diseases, also referred to as diffuse pleural thickening, begin with an inflammation of the pleura. This causes fluid to develop between the lung and the chest wall causing the lung to compress. Source: Asbestos Diseases Foundation of Australia Inc. ( Fluid may be surgically removed. When the fluid eventually disappears permanently, the pleura may become thickened and compress the lungs. Source: Asbestos Diseases Foundation of Australia Inc. ( Asbestos can also cause pleural plaques. These are not usually associated with any ill effects. These are like a patch of material stuck on the inside of the chest wall. They reach a certain size and stop growing but can be numerous to cover the whole chest wall. Pleural plaques do not shorten life and do not increase the likelihood of developing other asbestos related diseases. Source: Asbestos Diseases Foundation of Australia Inc. ( The latency period for pleural diseases is usually between 10 to 30 years. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 12

16 4 Data sources 4.1 ABS and national mortality database The Australian Bureau of Statistics (ABS) collects data on the cause of death for all Australians as recorded on death certificates. Registration of deaths in Australia is the responsibility of the state and territory Registrars of Births, Deaths and Marriages. Information on the cause of death is supplied by the medical practitioner certifying the death or by a coroner. Other information about the deceased is supplied by a relative or other person acquainted with the deceased or by an official institution where the death occurred. Registration of death is a legal requirement in Australia and compliance is virtually complete. The registrars provide deaths data to the ABS for coding and compilation into national statistics, for example Catalogue Causes of Death. The Australian Institute of Health and Welfare (AIHW) also holds these data without unique identifiers in a national mortality database. Causes of death are coded according to the International Classification of Disease (ICD) coding system. Since 1997 data has been published using the 10 th revision of this system, ICD-10. ICD-9 was used from 1979 to 1996 and earlier versions in earlier years. Since 1997 data has been reported by the ABS for multiple causes of death, being all causes and conditions reported on the death certificate as well as the underlying cause of death. Causes of death with particular relevance to investigation of ARDs are as follows: ICD-10 ICD-9 C45 Mesothelioma 163 Malignant neoplasm of pleura C33 C34 Malignant neoplasm of trachea Malignant neoplasm of bronchus and lung 162 Malignant neoplasm of trachea, bronchus and lung J61 Pneumoconiosis due to asbestos and other mineral fibres 501 Asbestosis Before ICD-10 there was no specific code for mesothelioma. ICD-9 code 163 was used as a proxy for mesothelioma in most studies, although it is well recognised that there is not a one-to-one relationship. Most studies have shown that the number of mesothelioma cases significantly exceeds the number of deaths coded as pleural cancers under ICD-9. (eg Peto et al [1999]; Pinheiro et al [2004]) There is no specific code for lung cancer arising from asbestos exposure. Since 1997 the data on multiple causes of death provides information on deaths where an ARD has been recorded as a secondary cause of death. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 13

17 4.2 State and National cancer surveillance data (This section is based on the publication Cancer in Australia 2000 (AIHW [2003]) and information provided by the Australian Institute of Health and Welfare.) The only effective method of obtaining malignant cancer incidence data is through universal registration of cancer diagnoses. In Australia the registration of cancer is required by law, usually under the Public Health Acts, in each State and Territory. The cancer registrations are collated by cancer registries that are supported by a mix of state and territory government and non-government organisations. Some state and territory cancer registries have been operating for nearly 30 years and obtain their information from hospitals, pathologists, radiation oncologists, cancer treatment centres and nursing homes. It was not until 1982, however, that cancer registration was universal in Australia for all states and territories excluding the ACT. Cancer notification in the ACT was not legislated until These registries report in various formats on cancers in their respective jurisdictions and supply information for national collation through the National Cancer Statistics Clearing House (NCSCH). The NCSCH is a database maintained by the Australasian Association of Cancer Registries (AACR) and the AIHW. A national minimum data set from the state and territory registries is provided to the NCSCH to enable national trends in cancer to be monitored. The data items provided to the NCSCH enable record linkage to be performed and the analysis of cancer by site and behaviour. Because of delays inherent in collecting and verifying this data there is generally a lag of up to three years before the data on diagnoses or deaths in a year is published. Data for incidence are currently available to 2000 and for mortality to The AIHW s website gives access to an on-line Cancer Data Cube which allows data to be viewed and exported in various cross-tabulations. The majority of the state and territory cancer registries use the International Classification of Disease for Oncology (ICDO-2) to code their cancer cases. Cancer incidence data included in the NCSCH which forms the basis for the Cube have been reclassified to ICD-10. The reclassification to ICD-10 is either performed at the registry or with the permission of the registry at the AIHW. Data in the AIHW Cube is available by calendar year of diagnosis and calendar year of death. The data is categorised by ICD-10 codes, so C45 (mesothelioma) and C33 and C34 (lung cancer) are relevant for ARDs. No data is available on secondary causes of death, so the C33 and C34 data includes all lung cancers. Asbestosis is not a cancer so there is no data on this disease in the Cube. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 14

18 4.3 Australian Mesothelioma Register The primary source of data on Australian mesothelioma diagnoses for many years was the Australian Mesothelioma Register (AMR). The AMR was maintained by the National Occupational Health and Safety Commission (NOHSC). Data was collected for all notified cases of mesothelioma and cross-checked with the state cancer registries. Additional data, including information on the industry and occupation of exposure, was obtained through a short survey form. Annual reports from the AMR provided detailed tabulations of diagnoses for the latest three diagnosis years for which cross-checking had been completed and preliminary figures for the numbers of cases notified in more recent years. NOHSC researchers, led by Dr Jim Leigh, regularly published reports on the history of mesothelioma incidence in Australia using the data from the AMR, data collected in the earlier Mesothelioma Surveillance Program and other sources. The AMR s central role as a data source has diminished in the past two years following introduction of privacy legislation which has limited cross-checking access to some cancer registries as well as a relocation of NOHSC from Sydney to Canberra which led to the loss of key staff including Dr Leigh. The last year for which AMR data is complete and unqualified is calendar During 2004 the management of the AMR has been transferred to the AIHW and it is hoped that this will restore the completeness of the AMR data series. 4.4 Data tabulations The following table summarises and compares data for recent years from the sources listed above: Table 4.1 Data on asbestos related diseases (Australia, all persons) Calendar year Mesothelioma Number of deaths by underlying cause (ABS): Pleural cancer (ICD-9 163) Mesothelioma (ICD-10 C45) Number of cases diagnosed: AIHW Data Cube (Oct. 2004) AMR (May 2003) Lung cancer Number of deaths by underlying cause (ABS): ICD ,689 6, ICD-10 C33 + C ,588 6,742 6,803 6,878 7,038 7,303 Number also mentioning asbestosis (J61) as a cause: Number of cases diagnosed: AIHW data cube (Oct. 2004) 7,569 7,774 7,942 7,952 7,961 8, Asbestosis Deaths mentioning asbestosis as a cause (ABS): Asbestosis (501/J61) as underlying cause Underlying causes other than cancer (C33, C34 or C45) Asbestosis-related deaths other than cancer C33, C34 or C45 as underlying cause Total deaths mentioning asbestosis as a cause IAAust Asbestos Working Group Discussion Paper (December 2004) Page 15

19 We note the following from this table: Mesothelioma: As overseas studies have also shown, pleural cancer deaths recorded under ICD-9 significantly understated mesothelioma deaths Mortality statistics account for around 85-90% of diagnosed mesotheliomas over the same period, which is consistent with overseas studies (Pinheiro et al [2004]). This connection is indirect because of varying lag times between diagnosis and death AIHW diagnosis numbers are slightly (around 3%) lower than AMR numbers until 1999, after which AMR data is known to be incomplete AIHW data shows level numbers of new diagnoses in the last 4 years available ( ). However, the mortality statistics for 2001 and 2002 suggest higher diagnosis numbers may be reported for 2001 and 2002 when that data becomes available. Lung cancer: Total lung cancer diagnoses and deaths outnumber mesothelioma by a factor of around 17:1 Only a small number of lung cancer deaths record asbestosis as a secondary cause or condition The ratio of lung cancer deaths to diagnoses over the same period is in the order of 80-85%, similar to the ratio for mesothelioma Asbestosis: The number of deaths due to asbestosis as the underlying cause is around 50 per annum This number increases to around 130 per annum counting all deaths where asbestosis is mentioned as a cause but excluding mesotheliomas and lung cancers (to avoid double counting). Based on the above data the current annual number of deaths in Australia from asbestos-related diseases is at least 650 approximately 500 mesotheliomas, 20 lung cancers and 130 asbestosisrelated with an unknown additional number (particularly lung cancers) where the contribution of asbestos as a cause of death has not been recorded on the death certificate. Some evidence on the extent of these additional numbers is considered in the Projections section of this paper. 4.5 Age distribution of mesothelioma cases One aspect of the recent Australian mesothelioma experience which is notable is the changing trend by age. The following graph shows the trend in the age distribution of mesothelioma diagnoses from AIHW data, averaged over 3 years to smooth the trend: IAAust Asbestos Working Group Discussion Paper (December 2004) Page 16

20 Graph 4.1 New Mesothelioma Cases Distribution by Age at Diagnosis 40% 35% 30% 25% 20% 15% 10% 5% 0% 80+ M M M M M 0-39 M Females Year of Diagnosis Particular observations from this graph are: men aged 80 and older at diagnosis now account for 13% of all new Australian cases compared with 7% fifteen years ago the proportion of males diagnosed at ages under 70 has been falling through the 1990s. In particular, the proportion (and in fact the absolute number) aged under 50 at diagnosis has declined a lot since the early 1990s the proportion of female cases has increased slowly but steadily. Currently females account for 15% of new Australian cases around 75 per annum. While not shown in this graph, it can be calculated from the underlying data that the average age of new male mesothelioma cases has increased steadily over the past 15 years and is currently around 69 years. The female average age has been 2 to 4 years younger than males although this gap appears to be closing in the last few years (the average female age is more volatile because of the smaller numbers of cases). 4.6 Compensation data Compensation for ARDs takes many forms around Australia and as a result there is no single source of data on the number of cases which are compensated. New South Wales provides two sources: the Dust Diseases Board (DDB) and the Dust Diseases Tribunal (DDT). The DDB provides statutory workers compensation benefits to workers eligible under the NSW workers compensation scheme who contracted a dust disease arising from employment in NSW. This excludes some employees who worked in NSW, eg defence and other Commonwealth government employees, and ARD cases arising outside employment, eg workers wives and families and home renovators. In its annual report the DDB publishes various statistics on claims IAAust Asbestos Working Group Discussion Paper (December 2004) Page 17

21 certified and compensated during the previous financial year. Accumulation of DDB annual reports creates a time series of compensation data. The DDT is a unique court dedicated to expeditious hearing of dust disease cases. The NSW Attorney-General s annual report publishes numbers of new matters registered and matters on hand in the DDT each financial year, which provides data for a time series of these cases. Apart from this NSW data, there is no other regular source of data on compensated ARD claims in Australia that is publicly available. The two graphs below use DDB, DDT and AMR data to show the following for NSW: Graph 4.2: a comparison of the numbers of new dust disease claims accepted for statutory workers compensation (DDB) with new matters registered for a common law claim (DDT excluding cross-claims) Graph 4.3: a comparison of the numbers of new cases of mesothelioma diagnosed in NSW (AMR) with new mesothelioma claims accepted for statutory workers compensation (DDB). Graph 4.2 NSW Dust Disease Claims Statutory W. Comp vs Common Law Year ended 30 June DDT-total DDB-total IAAust Asbestos Working Group Discussion Paper (December 2004) Page 18

22 Graph 4.3 NSW Mesotheliomas Diagnoses vs Statutory Workers Comp Claims Jun-90 Jun-92 Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Year ended AMR DDB-meso The populations in these three data sources contain a large overlap but there are also differences between them. For example: people now living interstate may be eligible to bring a claim in NSW; a common law claim may be made where no workers compensation claim exists. Bearing this in mind, some observations on the graphs are: the number of common law claims registered was consistently around 80% of statutory workers compensation numbers from 1994/95 to 1999/2000 then jumped to being significantly higher than workers compensation claims. This suggests there has been a significant change in the NSW litigation environment the number of statutory workers compensation mesothelioma claims followed at around twothirds of the number of diagnosed mesotheliomas up to The increase in workers compensation claims in 2002/03 suggests that, if nothing has changed in the compensation environment, there will be an increase in mesothelioma diagnosis numbers above their current flat trend when 2002 and later data becomes available. 4.7 Some general notes on using data sources Delays and backdating are a common feature of the data sources available for ARDs. Duplication of diagnoses or compensated cases may arise from disease progression, for example when a person diagnosed with asbestosis or pleural disease subsequently develops lung cancer or mesothelioma. While not such a common problem today, earlier data sources particularly insurance company compensation data may use the word asbestosis to refer to any ARD including mesothelioma. Individuals are often recorded as suffering from more than one ARD. In such cases it is usual to apply a hierarchy of disease, allocating the individual to the most serious eg (in descending order) mesothelioma, lung (or other) cancer, asbestosis, ARPD/pleural thickening and pleural plaques. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 19

23 5 Compensation and Insurance 5.1 ARD Exposures Asbestos exposure and the subsequent claims for ARD can be considered in a number of waves. The first wave was the mining and milling of raw asbestos materials in Australia, the second the manufacture of raw materials into asbestos products and the installation of these products, and the third wave the ongoing exposure to asbestos in-situ and subsequent renovation and/or removal. (There are various alternative versions of the number and composition of these waves.) To date, ARD claims have predominantly arisen from exposure to asbestos in the claimants working environment. Mining of asbestos materials in Australia has resulted in a significant number of claims, eg from the Wittenoom mine, and claims have also arisen from the manufacture of products such as asbestos sheeting and lagging materials. Claims are now stemming from employees who have used asbestos products directly in their working environment eg boilermakers, laggers and electricians. Industries where significant exposures occurred include government entities such as railways and power stations as well as the stevedoring industry where workers handled raw imported asbestos materials. There have also been a number of claims that can be linked back to the working environment but are a secondary exposure rather than due to working directly with asbestos materials. For example, spouses have been exposed to asbestos dust and contracted ARD through laundering their husband s clothing. There have also been claims arising from children and siblings of workers as a result of asbestos dust being brought from the work environment into the home. Looking forward, the continuation of the third wave of asbestos claims is likely to arise from domestic exposures through home renovations and exposure to asbestos in the general public environment such as schools and older buildings. Exposures could also come from the removal of asbestos products and, potentially, future disturbing of asbestos containment or disposal sites. 5.2 Defendants in ARD Claims Typically, ARD sufferers lodge a claim for compensation against a number of defendants. Long exposure periods mean it is common for multiple employers to be named on the same claim and it is also common for the supplier(s) of the asbestos product to be named as a defendant. Allegations on the claim can include a number of allegations against the employer(s), eg failure to provide a safe working environment, as well as allegations against the supplier(s), eg supplying a dangerous product and failure to warn of the risks associated with using that product. Naming as many parties in the claim as possible is encouraged by the legal principle that some ARD claims are non-divisible : because there is no threshold exposure level for causation of the ARD, liability is joint and several and the whole liability can be attributed to any one defendant if no others are joined. This position varies by jurisdiction and disease type, with mesothelioma being considered non-divisible in all jurisdictions. If the claimant does not name multiple parties, it is likely that the sole defendant will seek to join other parties as a cross defendant to share the compensation costs. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 20

24 5.3 Sources of Compensation Workers Compensation The most common source of historical compensation is through workers compensation schemes. Any person who can demonstrate that their ARD was caused by exposure to asbestos as part of their employment has both statutory and/or common law rights under workers compensation legislation. Most workers compensation claims are brought at common law under the legislation that prevailed at the time of exposure, so given the long latency of ARD most claims are brought under legislation predating the current WorkCover schemes. The transitional rules on introduction of the WorkCover schemes are complex and in some cases can lead to the schemes being liable for some or all of the compensation for particular claims. Specific no-fault schemes for statutory workers compensation for dust diseases exist in NSW (the Dust Diseases Board) and Western Australia (the Industrial Diseases Fund). Public and Products Liability Claims can also be brought against the supplier or manufacturer of the products on the basis that they had a responsibility to provide a safe product and warn users of the dangers associated with its products. Allegations against the supplier can be quite extensive and may target both product and public liability issues. Although at face value it would seem that claims should be product liability claims, courts tend to view the claim in totality and infer a level of public liability accountability. Public and products liability claims at present predominantly arise only against a relatively small number of companies that manufactured asbestos-based products. Other defendants of public liability claims are, for example, state electricity authorities (being sued by contractors that worked on site) and large contracting firms. 5.4 Amount of compensation The amount payable in compensation under common law depends on the circumstances of the case, with the main determinants being the jurisdiction, disease and age of the claimant. For an individual defendant the cost will also depend on the number of other defendants and the apportionment of the cost. Experience tends to show that claims litigated in NSW receive higher compensation than claims litigated in other states, with Victoria close behind. All else being equal, mesothelioma claims usually receive more than claims for non-malignant diseases, particularly for general damages, although severe asbestosis claims can be close to mesothelioma. Lung cancer claims are similar to or slightly less than mesothelioma. Age has most effect through economic loss awards many ARD claims are made after the claimant has retired from work so there is little or no loss of earnings, with the occasional claim having a substantial loss of earnings component. To the extent that a benchmark for a typical mesothelioma claim in NSW can be estimated at present, total compensation before sharing is probably in the order of $300,000 excluding any economic loss, being around $180,000 to $200,000 general damages, $20,000 to $30,000 of medical and other expenses, $10,000 to $20,000 for loss of expectation of life and $50,000 for care IAAust Asbestos Working Group Discussion Paper (December 2004) Page 21

25 and services (though this last component is quite variable). To these amounts would be added any economic loss component. In addition to compensation are the plaintiff and defendant legal costs. Some plaintiff legal costs may be met from the claimant s compensation. If a mesothelioma case is also eligible for NSW workers compensation through the Dust Diseases Board, a lump sum death benefit in the order of $200,000 is payable to the worker s family (reducing with age) as well as pension benefits to the worker and dependants. The Board also meets the worker s medical benefits. Total compensation for an occupational ARD claim in NSW with a dependent spouse is therefore generally more than $500,000 from the combination of statutory and common law payments. 5.5 The Role of Governments The Commonwealth and state governments are involved in asbestos compensation in a number of ways. As employers, governments had some large exposures including the defence forces, state shipyards and dockyards, railways and power stations. These exposures have created significant workers compensation costs and some public liability claims as well. Most of the government liabilities were either self-insured or insured through state-owned insurers so much of the cost is ultimately funded by the public. Government has also become the residual employer or insurer in particular situations, including the stevedoring industry whose ARD claims are funded through an agency of the Commonwealth Department of Transport. As discussed above, government workers compensation authorities may have ARD liabilities through direct apportionment of claims costs, specific schemes (the NSW Dust Diseases Board) or guarantee funds for failed insurers and uninsured employers. To the extent that these liabilities are unfunded the compensation cost is met from current and future workers compensation premiums. Former Commonwealth employees, including former Navy personnel, can elect to claim under either common law or a statutory scheme. Claims under common law generally extinguish any rights of the claimant under the statutory schemes administered by Comcare and Veterans Affairs. However, common law claims do not extinguish the right of a dependant to subsequently claim a death benefit under the statutory scheme. Governments have a role in legislating and enforcing occupational health and safety standards. In a recent case an ARD defendant attempted to join a state government for failing to enforce its OH&S obligations. This claim is currently on appeal in the High Court having failed in the state Court of Appeal. IAAust Asbestos Working Group Discussion Paper (December 2004) Page 22