IT Perspective: Looming asbestos liabilities raise coverage questions; Nonproduct liability issues adding to uncertainty for insurers.(Insurer Topics: Customer Service)

Byline: Lloyd Gura and Barry Bassis

In the movie "Jurassic Park,'' there is a scene where someone in an open field is suddenly covered by a shadow, whereupon he looks up to discover that he is facing a tyrannosaurus. The insurance industry is like that at the moment, and the monster with the big jaws is asbestos.

And, just when the would-be victim thinks he has reached safe ground, another dinosaur appears, this one a vicious raptor. For the industry, that dangerous creature is asbestos nonproduct liability.

Asbestos claims have flooded the courts, bankrupting more than 60 companies. A Rand Institute for Civil Justice study in September 2002 found there were more than 600,000 asbestos-related lawsuits currently in the courts-in addition to more than 600,000 previously litigated claims-and estimated that the claims could cost businesses more than $210 billion.

Consequently, insurers have been adding massive amounts to their reserves. For example, Travelers Property Casualty Corp. recently announced it added $2.45 billion to its asbestos reserves, and ACE Ltd. boosted its gross reserves by $1.91 billion. In October 2002, Chubb Corp. announced it was adding $625 million to its asbestos reserves.

Many believe these efforts were not enough. A …