Document 9JBk2d7E7yMxD2z3yJep0EzRR

INTEROFFICE COMMUNICATION (qjuu&a. l 1 CASUALTY TO FROM ` oare SUBJECT E* P. Srady, director, Soncerciel Insvxrar.ee Claim J* S. S&cfcer, Direc,tcr, Haticr-al Accounts Clais April 2Qi 1977 ASBESTOS The analyses prepared by Charlie Piano and Bill thaabauld good appraisals of tfc<s asbestos problem, Therb are a few things that I think should be emphasized, and 2 vill take the liberty cf expending the perspective somewhat beyond asbestos*. 1, Asbestos is getting most of the attention, but is, from ixf viewpoint, Just the leading edge of the health phenoaena that ' wt are starting to see id the product liability and workers* compensation areas* The era Of nationwide exposure to multiple claims ha* arrived. Tris, the cancer-0easing flane retardant in children11 cloth ing, is the latest example, Ve are also confronted with lung eases arising froa coke ovens, vaginal cancer fr DS$, in juries ranging from abortion `to deformed Children from the XVD, lung cases related to laed pigments, allegations that fdherglas causes c*Cr, liver cancer cases related to vinyl chloride, etc*, etc* The co=noa denoodnator on all of these injury cases is th*ti (i) they Uve arisen in the pain four, years, and (2) no one, including nedic&l science, previously made or publicized the connection between the exposures and the injuries. On a prospective basis, it Is impossible to predict what the next problem will be* This places us in an extrtsaly difficult position, since we ere writing contracts today which will respond to exposures that are discovered tomorrow. I shirk that Bill I^Irnba^ll4, J observation that the "potential is enormous and unpredictable" applies not only to the known problem (asbestos), but to anyone engaged in manufacturing, distributing, or working with virtually any product or chemi cal that can be breathed, ingested, injected, or worn. Keamdiils, as polyurethane and kepone have demonstrated, property denage exposures have likewise escalated m recent years, and the Sane prediction problem is involved. .***.** 1 4b -O "You get petion with /Sir.a" PLAINTIFFS EXHIBIT WU-POiKCS PLAINTIFF'S EXHIBIT -2e p. Brady April 28, i$T7 21 So far, payments cn asbestos cases have teed very limited. Yet, the potential for punitive damages is v*xy real, eir.ee thre it evidence tint the asbettci industry knew of the haiards tn*my years ego* yet ftiled to vara, .PCP. .for instance. yut their firat rather, innocuous vermins on their products ia 1972*and there is* a similar. patten la the root of the jndus- Evidence via introduced la the JCarjalh case in (ttnaeeot* (filed in 1S71) that Jobna-Marnsville "knew by at least the 1930' a that persons Wha worked at plants there asbestoe products vert Manufactured w*? exposed to a substantial health hazard," It was admitted, in trial, that J-H "knew as early as 19^2 that asbestos would cense asbestosls when in haled by factory woifcars." ihera was no warning, The plain tiff was swarded $200,000* Obviously, plaintiffs can develop evidence to attempt to Make A case for fraud and deception against the asbestos industry. If this leads to punitive damage swards, our limited payments to date offer no reassurance, since- "occurrence* wording does net eliminate coverage, end most States allow recovery froa insurance policies. Beyond asbestos, this "testing4, warning" Question is present to *< degree in virtually in all of the health-tjrpe claims. 3, Ust but not least, X went to emphasize the coverage dilearca. Eealth-type injuries noreally occur at some indeterminable point in tine, She question is when an exposure to conditions "results, during tht policy period, in bodily injury." tna bas stuck to the manifestation argument, i.e, there was some known cr ascertainable bodily impetrsent, Under our argument, which is shared by only some of the Insurance industry, we ex pose only one policy. X btlieve that it is entirely possible, indeed probable | that this argument will not stand the test of time. Vhat happens in 1980 when some twenty-year distributor realizes that claim payments have exhausted hts 1971* policy limits, and ha is without insurance? Isn't be likely to allege that a series Of exposures extending from 195^ to 1$7** added to the bodily injury each year? Let's face it, our present occurrence wording does not contemplate this situation, and the "results, during the policy period, in bodily injury" wording is indefi nite enough to he construed as ambiguous, ex"po3ing the limit oi every policy written over a twenty-year span. F* Brady April 28, 1977 Obviously, w* cannot rewrite expired policies to eliminate the potential. But, if our exposure is ultimately spread across cider policies, severe limitations of coverage on the aost recent policies will not efftr touch solace to the insurance industry. The rise of heath-type claims could ultimately prove to be 4 pandora's box for the insurance industry, l.i> po natter what ve do currently to obvi*te exposure it will prove to have little or no impact oa our overall exposure* Tiie above concerns are well known to national Accounts* They have reacted quite veil ia recent years, and have written increasingly re strictive coverages. They hero elioinateg coverages, and have devised protective plans that were unheard of five years ago. I'm quite con fident that fttna leads the industry in this regard. My prospective concerns suggest that! (1) ve heed to be extremely cautious about underwriting any risk, regardless Of past history, which has the potential for claims over substances that can be breathed, ingested, injected, or worn} (2) whatever position the industry Ultimately takes on punitive damages, taa Bust seriously consider eliminating punitive damage coverage; and (j) a rt-draft of the "occur rence'* definition to cope with the health injuries should be a priority Item. All of the foregoing would, seemingly, make our ultimate expo sure under current contracts (sort predictable, and predictability Is our basic problem, , I hope that the foregoing unsolicited observations frem someone who has been on the firing line since these shells started to explode are merely an indication that our flanks have been overrun, but we art still winning the battle, 1 pass these observations along for what-' ever they may be worth, ak