The $4.69 billion judgment against Johnson & Johnson over claims that its talcum powder products contain asbestos and caused women to develop ovarian cancer has the insurance industry in a tizzy wondering how much of the cost insurance companies will have to shoulder.
“The J&J news prompted us to revisit this topic,” Buckingham Research Group analyst Amit Kumar told Reuters. He brought up the issue during W.R. Berkley Corp’s recent call. “I wanted to get a sense as to whether this is going to turn into a bigger deal and catch us by surprise.”
Since the verdict, analysts have tapped talc litigation as a financial risk for insurers, like Travelers Companies Inc., Chubb Ltd., and the Hartford Financial Services Group Inc. Policies that may cover asbestos liability were written decades ago, and the question of who is liable can be hard to pinpoint with some policies being offloaded to reinsurers.
“In J&J’s case, we would not be surprised if the plaintiffs’ bar found a way to trigger coverage under its old liability policies, which we think could lead to additional exposure for insurers,” Barclays analysts Jay Gelb wrote in a research note.
Chubb Chief Executive Evan Greenberg says he is not concerned and believes the verdict will not stand on appeal. J&J Chief Executive Alex Gorsky had already stated he didn’t believe the verdict would stand. “We are confident that there are multiple grounds for reversal of this jury verdict and that, ultimately, the case will be reversed.”
J&J stopped buying product liability coverage in 2005 because it was pricey and hard to find. Instead, the company uses a self-insurance program through a subsidiary, Middlesex Assurance Company Ltd.
J&J faces 9,000 cases across the country over its talc products. Many cases claim that use of the company’s talcum powder on the genitals for feminine hygiene caused ovarian cancer. Others say the asbestos-tainted talc caused mesothelioma, a rare but deadly form of cancer that develops in the lining of the lungs and other internal organs.