P&C Perspectives: Swiss asbestos cases highlight tail risk

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By Thomas Guidon, Stefan Scholz, Travis J. Grulkowski | 30 November 2011

Facing rising costs from asbestos-related diseases, Switzerland became an early adopter of an international ban in 1989. Yet, Switzerland is still paying the price: victims typically do not show symptoms until 20 to 50 years after exposure, representing significant tail risk. Overall costs from diseases could total almost CHF1 billion in Switzerland alone, burdening state insurance funds—and perhaps corporate balance sheets—for years to come.

This paper discusses how Switzerland provides an instructive example for other EU nations facing similar issues, and why insurers should get a handle on the potential costs of asbestos-related health problems, which are likely to persist well into the middle of this century.