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Introduction
Asbestos: The Next Wave? 15 September 2014
Asbestos: The Next Wave? Thomas Toce, FCAS 15 September 2014 - - PowerPoint PPT Presentation
Asbestos: The Next Wave? Thomas Toce, FCAS 15 September 2014 - - PowerPoint PPT Presentation
Asbestos: The Next Wave? Thomas Toce, FCAS 15 September 2014 Introduction The next wave of asbestos is likely to be. Mesothelioma the same as the last couple of waves Demography Why? Two reasons: Propensity to sue Page 2 15
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Introduction
Asbestos: The Next Wave? 15 September 2014
► But first…. The poor track record of estimating asbestos
100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 1988 1993 1997 2005 2013
Manville Trust – Asbestos Claims filing
Filed claims Expected Ultimate filed claims
► Perhaps unfair…
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Introduction
Asbestos: The Next Wave? 15 September 2014
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Epidemiological studies scaled to actual reported mesothelioma deaths
Rpt Meso deaths Manville (2001 Stallard) Nicholson Price & Ware 2004
► Let’s take a look at epidemiological studies ► Stallard and Nicholson imply that decay in 2014 should be
4% (0.96) with a constant second order decay of 0.9972
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Introduction
Asbestos: The Next Wave? 15 September 2014
► But are we really seeing a decay?
►
Not per CDC
►
Not for some later-tiered defendants seeing upward trends
2,300 2,400 2,500 2,600 2,700 2,800 2,900 3,000 3,100 3,200 3,300 3,400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Rpt Meso deaths Manville (2001 Stallard) Nicholson Price & Ware 2004 Rpt Meso deaths
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Introduction
Asbestos: The Next Wave? 15 September 2014
500 1,000 1,500 2,000 2,500 3,000 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 Meso deaths
Rpt Meso deaths Low projections High projections
► Where is the decay? Has the turning point actually been
reached?
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Consider Exposure & Demographic Factors
Asbestos: The Next Wave? 15 September 2014
- 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Births in thousands Asbestos consumption in tons
US Asbestos consumption Births OSHA protection efficiency
No OSHA protection Decrease in exposure due to OSHA protection efficiency
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Consider Population Occupation
Asbestos: The Next Wave? 15 September 2014
► Percentage of the US Population employed in occupation
exposed to Asbestos
► 1930
41%
► 1945
43%
► 1960
38%
► 1975
30%
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Consider Exposure Factors
15 September 2014 Asbestos: The Next Wave?
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Modeling Assumptions
15 September 2014 Asbestos: The Next Wave?
Year of birth Exposure Factors Low Base High 1900 0.20 0.20 0.20 1910 0.50 0.50 0.50 1920 0.80 0.80 0.80 1930 1.00 1.00 1.00 1940 0.75 0.80 0.90 1950 0.50 0.60 0.75 1960 0.25 0.30 0.50 1970 0.05 0.10 0.20 1980 0.01 0.05 0.10 1990 0.00 0.01 0.05
► Asbestos consumption ► OSHA measures ► Population occupation
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So… what’s the answer?
Demographic Model results
Asbestos: The Next Wave? 15 September 2014
500 1,000 1,500 2,000 2,500 3,000 3,500 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
Rpt Meso deaths Low projections Mid projections High projections Manville (2001 Stallard) Nicholson Price & Ware 2004
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Year of birth of current deaths
Asbestos: The Next Wave? 15 September 2014
1900 1910 1920 1930 1940 1950 1960 1970 Year of Birth distribution - 2010 deaths Age Number of deaths in 2010 <25 25--34 11 35--44 26 45--54 104 55--64 345 65--74 805 75--84 1042 ≥85 412 Total 2745 5% of current deaths born after 1952
► Difficulty to parameterize and test the models:
►
Current deaths born in average in 1936
►
Only 5% of current deaths born after 1952
► Because age distribution has a 10 year standard deviation
we can’t observe decline yet
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So… what’s the answer?
Range
Asbestos: The Next Wave? 15 September 2014
► High uncertainty leads to wide range of answers ► Demographic models results: ► Maybe the best way to look at it is through probability
distribution:
Low Mid High Future number of meso deaths 43,000 60,000 77,000
20,000 45,000 70,000 95,000 120,000 65% chance of falling in the range
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Conclusion
Asbestos: The Next Wave? 15 September 2014
► Demographic factors may explain part of the surge in
mesothelioma claims filing
► Other factors include:
► More later-tiered defendants brought into litigation ► Longevity of asbestos-containing products
► Final liability also depends on:
► Closed With Indemnity Payment ratios (“CWIP”) ► Severity
► Defendants expect a decrease in CWIP ratio ► Impact of Garlock decision
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Q&A
15 September 2014 Asbestos: The Next Wave?