The U.S. insurance industry is as much as $9 billion short of the reserves it will need to ultimately pay asbestos claims, Fitch Ratings said in a new report on Thursday.
Insurers have paid $53 billion in asbestos claims, hold $23 billion in reserves, and face ultimate industry losses of about $85 billion, Fitch said. (The shortfall could be as little as $2 billion, the firm noted, depending on the ultimate level of claims).
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More than 50 years after the first suits linked to health problems from the insulating material, insurers paid nearly $2.1 billion in asbestos losses in 2013, Fitch said, the second straight year payouts had risen.
The industry's survival ratio—how long its reserves will last based on average claims payments over the last three years—was just over 10 at year's end. Fitch said it should be at least 11 and as much as 14.
Insurers blame their increasing losses on attorneys more aggressively pursuing clients to make claims for mesothelioma, a cancer linked to asbestos.
"The number of annual filed claims continues to decline, but average payment per claim remains elevated, largely due to the rising percentage of mesothelioma claims (which have larger payouts) relative to total lung cancer claims," Fitch said.
—By CNBC's Ben Berkowitz