Last week brought $88 million of losses for insurers and others in “talc” verdicts. A recent talk by Peyton Manning to insurance executives highlights the need for multidisciplinary teams if insurers and others actually wish to have a more complete understanding of contingent risks, such as talc claims. Manning’s comments are described in an October 27, 2016 article at Carrier Management. Some key quotes are as follows:
“In many respects your profession isn’t that much different from professional football. You’re expected to master the complicated and underwrite very specific risks,” he said. “Quarterbacks are faced with similar challenges. They have to master complex game plans, hundreds of plays mixed with pivot formations that may result in up to 1,000 different combinations. Quarterbacks also have to deal with time, noise, weather—and also those 300-pound defensive linemen.” …
Whether a quarterback or insurance expert, the team you surround yourself with and how you choose to lead them, I promise you, will be a huge part of your record when your season is done,” he said. “Your results are directly proportionate to the effort and skill you put into leading your team.” …
… [are] you ready to dig deep enough to discover insights that can provoke valuable action?” he said.
In papers last year and this year, our multi-disciplinary team of scientists, a lawyer and an actuary wrote that a careful look at science and law indicated insurance companies are under-reserved for asbestos and “talc” cases. Numerous stakeholders bought the papers, and we know some raised reserves after reading the papers. But of course far more did not raise reserves and/or did not buy the papers. How is it, we wonder, that some insurers, actuaries, auditors and other professionals are passing judgments on asbestos and talc risks, but do not have their own, knowledgeable multidisciplinary teams, do not buy the papers and do not otherwise show willingness to learn and change?
Our most recent paper was published about 8 weeks ago. In it, we dug into science, and explained and predicted that a careful look at science reveals more problems for ahead some insurers (and some others) as to talc claims in particular. Since then, things have worsened for insurers and some of their insureds. Among other things, two plaintiff verdicts were reported in “talc” cases, with total judgements at about $88 million. One case involved ovarian cancer in woman who used “cosmetic talc” products (i.e. talcum powder); that verdict was $70 million, once again in St. Louis and once again involving both compensatory damages ($2.5 million) and punitive damages ($67.5 million), as reported in an October 27, 2016 story at HarrisMartin. (Note: at least some of the punitive awards presumably will be reduced to 10x the compensatory damages, or lower, under SCOTUS’ due process rules.)
The second verdict involved a different type of talc claim. As reported by HarrisMartin in a different October 27, 2016 story, “the plaintiffs alleged in their complaint that Philip Depoian’s mesothelioma was caused by exposure to asbestos in cosmetic talc [he] encountered [in] products while at a barbershop where his father worked and through his personal use of talc-containing products such as Old Spice, Clubman, Kings Men and Mennen Shave Talc.” The jury entered awards for $18 million of compensatory damages. Moreover, “jurors also found that Whittaker Clark & Daniels acted with malice, triggering a second, punitive damage phase of the trial. The parties reached a confidential settlement agreement before that phase was set to begin, however.”
The world today is brimming with volumes of high quality information never before available. It takes true effort and expertise to evaluate today’s flood of information and discern the difference between the signal and the noise. Indeed, noise can be more than just a distraction, it can be dangerous. Indeed, if the signal is missed and noise is not managed correctly, a result may be a 20 yard loss on the football field, or massive losses at trial. As Peyton Manning reminded insurers, success requires a team of skilled players filling different roles and willing to work hard and dig deep. Some insurers and other professionals are working in multidisciplinary teams in order to find and address the real signals. Others are still using the same old limited teams that listen to noise, and are suffering repeated losses with no visible plan for change.