Asbestos was once considered as a miracle man-made construction product. It was used by most industries such as engineering and construction from the early 1940’s through to the 1970’s.

However, it was discovered that asbestos can cause life-threatening diseases such as asbestosis and lung cancer. The problem is the number of years it takes to cause an illness which typically can be 20 to 50 years and therefore no-one was aware of the risks, until the damage had long been done. Asbestos contains minute fibers that float in the air. These are then inhaled and cause irritation in the lungs which over time cause serious diseases.

While asbestos is no longer used claims from those persons exposed to asbestos continue to rise and are expected to rise until around 2020. Estimates suggest that 80 percent of U.S. companies may have some form of exposure to potential liability claims. It is therefore important that companies that used asbestos in the past undertake a review of their potential liability to asbestos claims.

Any company that used asbestos at any time could be at risk of getting claims from employees past and present. Initially a company needs to try and calculate its degree of risk. When assessing the risk a company needs to take account of the following factors:

– Calculate the number of employees that were exposed to asbestos throughout the period that it was used. This provides your maximum potential liability to claims, but the actual number is likely to be less, as not all persons exposed contract the diseases.

– Find out what type of asbestos was used by the company. For example, blue asbestos is far more dangerous than white asbestos. Group the employees into those exposed to each type if possible.

– Ascertain what protection, if any, was afforded to the employees during contact with asbestos. Did the company provide protective clothing or face masks. Were adequate warning signs displayed?

– Check whether the company has acquired other companies that may have had exposure to asbestos.

This initial fact finding study enables a company to work out a strategic approach as to how to manage potential claims.

A company then needs to check through insurance documentation past and present so ascertain what coverage was in place and the policy claim limits. Importantly the policy exclusions need to be studied carefully. If a company’s insurance policy covers asbestos claims, then all or some of any claims presented may be offset under the policy. If there wasn’t insurance coverage then a company will be directly liable for any claims, including the cost of litigation, unless out of court settlements can be arranged.

Attempting to calculate the potential monetary figure involved is a difficult task. However, if a company researches other claims made and settled it can roughly work out its potential liability and reserve accordingly. Successful management of a company’s liability to asbestos related claims will help protect the company from unnecessary financial loss and enables a company to continue to plan for the future.

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Category: Business Management
Keywords: Environment, Insurance, Business