On April 20, AIG, one of the largest insurers in the United States, approved a transfer of asbestos liability to Berkshire Hathaway.
The liability, derived from asbestos claims against the insurer’s Chartis business, was expected to total nearly $3.5 billion. In the deal, AIG will pay $1.65 billion to Berkshire in exchange for the liability coverage.
Previously, Berkshire has undertaken this type of agreement with other companies such as Lloyd’s of London and CNA Financial Corp. According to the Insurance Information Institute, between 1991 and 2008, insurers have paid over $30 billion in asbestos liability claims. The majority of asbestos claims filed against Chartis are from liability policies that were underwritten before 1985.
Because of the nature for liability to continually change, it is always best to consult a qualified and experienced mesothelioma lawyer before undertaking an asbestos-related personal-injury claim with an insurer or company. Sometimes the original company or manufacturer of the asbestos product responsible for exposure may be owned by another entity and the litigation process can be confusing.
Due to the long latency period associated with asbestos-related diseases, most people do not display symptoms until decades after their initial exposure to asbestos. Because of the latency period, many companies and insurers have been inundated by injury claims from employees. Insurers describe exposure to asbestos as a “long-tail” insurance risk, because claims are typically filed years after an original policy is underwritten.
However, not all claims will be transferred to Berkshire. Any claims that AIG had previously set aside funds to compensate would be retained by the insurer. National Indemnity, Berkshire’s insurance unit, is expected to have insurance claims totaling $65 billion this year.