d finitive [ accident compensation ] Keeping you informed. JUNE 2014 Asbestos News The latest from Australia and elsewhere News has been running hot in the asbestos area over the last six months. This d finitive summarises key developments including: >> James Hardie materially increases asbestos reserves >> Settlement of third wave claims by James Hardie and by Queensland local council >> Queensland government establishes new asbestos management plan >> Benchmarking of US asbestos reserves by Fitch >> UK Mesothelioma Act establishes fund for mesothelioma suffers who are unable to find a liable employer. Key: Disease and research Court outcomes Compensation and insurance Asbestos use and management Read on for these stories and more in asbestos news from across the world. www.finity.com.au Sydney +61 2 8252 3300 Auckland +64 9 363 2894 Melbourne +61 3 8080 0900 Wellington +64 4 460 5213 2 d finitive JUNE 2014
Australia >> Jun 2014 Western Australia to review asbestos compensation The Western Australian Law Reform Commission has announced a review of compensation for sufferers of asbestos-related diseases. Potential changes include to the once and for all rule, which would allow people who later develop a different or more serious condition to receive extra damages. The commission may also allow damages to reflect the commercial value of personal or domestic work for others that incapacitated people can no longer provide. Recommendations will be made to the Attorney General by July 2015. >> May 2014 ASEA to be axed The recent National Commission of Audit recommended that the Asbestos Safety and Eradication Agency (ASEA) be consolidated into a government department, and it is expected to be axed. ASEA was set up in 2013 with a $12 million budget over four years, and was to deliver a national strategic plan on asbestos management and safety. >> May 2014 New research mesothelioma risk increases after exposure ends Research out of Curtin University concludes that the risk of developing mesothelioma increases following the cessation of exposure. The rate of increase levels out after 40-50 years. Read the article here. >> Apr 2014 AICF settles with third wave victim The claimant Stephen Wickham was reported to have contracted mesothelioma after knocking down his backyard shed in 1994. He stated that while he did know that asbestos was dangerous, he hadn t heard of fibro until coming to Australia in 1987, and didn t know that fibro manufactured before the early 1980s contains asbestos. The case was regarded by some as a test of whether James Hardie would accept liability for third wave claims. The fund and Mr Wickham came to a confidential settlement and the case was not pursued. >> Mar 2014 Comcare funds asbestos injury impact study Southern Cross University s Regional Initiative for Social Innovation and Research has produced a report The Asbestos Narratives. The report provides new insights and evidence into the social, psychological and economic impacts of asbestos-related disease. The report was funded by Comcare s Asbestos Innovation Fund and can be found here. >> Mar 2014 New Queensland Asbestos Management Plan The Queensland government has launched the Statewide Strategic Plan for the Safe Management of Asbestos in Queensland 2014-2019. The plan focuses on effective cooperation between local councils, which will cover asbestos management for private residences, and the state government managing workplace safety. Penalties will be reviewed and an online register for contractors with asbestos licenses will be developed. 2 d finitive JUNE 2014
>> Mar 2014 Mesothelioma settlement with Gold Coast Council Claimant Mr Prokop, 43, contracted mesothelioma after working as an apprentice carpenter in 1990-92, pulling down and crushing fibro sheets. He was due to go to trial, with the Gold Coast Council defending the claim, but on the eve of the court date the case was adjourned and listed for settlement negotiations. >> Dec 2013 Victorian Schools to have warning signs Victorian schools with on-site asbestos will display warning signs at their front gates. The Department of Education will also set up a taskforce to audit how schools manage asbestos. The actions are the consequence of legal action from WorkSafe Victoria after safety breaches at several schools. North America >> Apr 2014 Fitch dashboard Fitch Ratings has released its annual Asbestos Liability Dashboard, which highlights key trends in asbestos liabilities covered by US insurance companies: Fitch estimates that 2013 industry asbestos reserves are deficient by $2-9 billion, based on estimated ultimate industry costs of $85 billion. Current asbestos reserves total around $23 billion, and make up 4% of total insurance industry reserves. In recent years total asbestos claim numbers have continued to decline, but strengthening of ultimate loss estimates has continued due to higher average payments per claim. The higher average payments reflect a rising proportion of mesothelioma claims, which have larger payouts on average. >> Mar 2014 Wisconsin asbestos compensation laws Wisconsin has signed into law a bill that requires plaintiffs to reveal how many businesses they plan to sue, and to seek compensation from asbestos trusts before they can sue for more in court. The law is designed to prevent lawyers from filing multiple claims against trusts and businesses. >> Sep 2013 Garlock liability cut Garlock manufactures seals and gaskets, and has been a defendant in asbestos litigation for 40 years. A US bankruptcy judge has accepted that Garlock s future asbestos liability is $125 million, much lower than the $1.3 billion proposed by plaintiff lawyers. The judge said that plaintiff attorneys have unfairly inflated the [claims] against Garlock by withholding evidence about claimants other exposures. 3 d finitive JUNE 2014
UK >> Jan 2014 Mesothelioma Act In January the UK government passed the Mesothelioma Act 2014. It provides for compensation to mesothelioma sufferers who are unable to find a liable insurer or employer, with eligible claimants to receive an average of 123,000 from the scheme. The scheme expects to pay out 30 million in compensation each year, with over 800 people to be compensated in 2014 and 300 each year thereafter. The scheme is funded via a levy on insurers, which will not exceed 2.74% of employers liability premiums for the first four years of operation. The UK government s impact assessment for the scheme shows that around 1,500 employers liability mesothelioma claims are reported each year. These represent around 60% of all mesothelioma cases. About 300 claims per year with untraceable occupational exposure are expected to qualify for the new scheme. Other international >> Jun 2014 Higher mesothelioma risk for firefighters A Finnish study of census data from 1961 to 2005 has concluded that firefighters have a higher risk of mesothelioma; in the study the mesothelioma incidence for firefighters was more than 150% of the normal incidence. The study also found that asbestos exposure may not be the only cause of the higher incidence; shift work and exposure to byproducts of burning fuel may also contribute. >> Dec 2013 Japanese Government liable The Osaka High Court has found in favour of 58 plaintiffs, holding the government liable for failing to prevent workers from being exposed to asbestos. The court awarded 340 million yen (about A$3.6 million) in damages, much higher than the 180 million yen (A$1.9 million) awarded by the district court in March 2012. The plaintiffs were exposed between 1947 and 1999, some in asbestos spinning mills. 4 d finitive JUNE 2014
Feature Piece James Hardie Asbestos Liabilities KPMG s 31 March 2014 valuation of asbestos-related disease liabilities of former James Hardie entities was released on 22 May 2014. The valuation shows an estimated outstanding liability of $1.87 billion. This is $294 million (19%) higher than the expected March 2014 liability ($1.58 billion). The primary driver of the movement is an increase in the projected number of future mesothelioma claims, following a significant increase in claims reported during the past 12 months. In 2013/14 370 mesothelioma claims were received, compared with an expectation of around 300 claims. This is also 20% higher than the previous highest of 309 claims received in 2012/13. For other disease types, recent claim experience has been more consistent with expectations, and only modest changes in the liabilities have been made. Other observations on the mesothelioma claims experience are: Previous estimates of the liabilities expected that mesothelioma claim reporting would peak in 2010/11 The recent spike appears to be related to increases in direct James Hardie claims (rather than cross-claims), particularly where James Hardie is the sole defendant At a jurisdictional level, materially higher claim reporting was observed in NSW, SA and WA The age and asbestos exposure profile of the 2013/14 claimants is broadly consistent with the profile of claimants reported in the three years prior to 2013/14. 5 d finitive JUNE 2014
www.finity.com.au d finitive [ accident compensation ] Keep your eye out for news of our second Asbestos Seminar which we will again present jointly with Colin Biggers & Paisley lawyers. Finity & asbestos Finity s dedicated asbestos team advises government agencies, insurers, reinsurers and other companies on their asbestos-related liabilities. Our experienced consultants remain at the forefront of actuarial research into compensation for asbestos-related diseases in Australia. Since 1991, we have collected and analysed data on asbestos-related disease claims arising from industrial, environmental and product-related exposures; this extensive historical database represents a key resource for the provision of our advice. We regularly update our modelling approach, responding to changes in disease incidence as well as trends in the claims and litigation environment. If you have any questions about the material in this newsletter please contact David McNab on +61 3 8080 0903 or at david.mcnab@finity.com.au Contacts Brett Riley brett.riley@finity.com.au 02 8252 3382 David McNab david.mcnab@finity.com.au 03 8080 0903 Claire White claire.white@finity.com.au 02 8252 3305 Asbestos News is a summary of information from the media and other public sources. Finity takes no responsibility for the accuracy of the content. This newsletter does not constitute actuarial or professional advice. Australia & New Zealand Insurance Industry Award Service Provider of the Year 2006, 2007, 2008, 2009 and 2011. Australian Insurance Industry Awards - Inaugural Inductee into the Hall of Fame 2012. Australia Sydney Tel +61 2 8252 3300 Level 7, 155 George St The Rocks, NSW 2000 Melbourne Tel +61 3 8080 0900 Level 3, 30 Collins Street Melbourne, VIC 3000 New Zealand Auckland Tel +64 9 363 2894 Level 27, 188 Quay St Auckland 1010 Wellington Tel +64 4 460 5213 Level 16, 157 Lambton Quay Wellington 6140 Contact the Author David McNab Tel +61 3 8080 0903 david.mcnab@finity.com.au Melbourne office Finity Consulting Pty Limited ABN 89 111 470 270