Reserving for Asbestos Liabilities

Significant uncertainties surround the ultimate costs of asbestos liabilities. The goal of the present work is to provide the actuary with the necessary framework to perform a rigorous analysis of such liabilities. It should be noted that while there is no algorithm that guarantees success, there is a proper approach to the problem. The keys to a rigorous analysis of asbestos liabilities can be summarized as follows:
* Effective knowledge gathering regarding the liabilities of the risk entity under investigation via thorough, open, and constant communication with thus responsible for disposing of those liabilities;
* A commitment to keeping abreast of the global issues in the asbestos litigation;
* The application of actuarial skills, judgment and creativity in designing a flexible and transparent model with well documented assumptions and well communicated interpretation of results.