Travelers 2014 Annual Report Download - page 59

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To the extent both issues are resolved in a policyholder's favor and our other defenses are not successful, our coverage obligations under the
policies at issue would be materially increased and bounded only by the applicable per
- occurrence limits and the number of asbestos bodily injury
claims against the policyholders. Although we have seen a moderation in the overall risk associated with these lawsuits, it remains difficult to
predict the ultimate cost of these claims.
Further, in addition to claims against policyholders, proceedings have been launched directly against insurers, including us, by individuals
challenging insurers' conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged
asbestos
- related bodily injuries. It is possible that the filing of other direct actions against insurers, including us, could be made in the future. It is
difficult to predict the outcome of these proceedings, including whether the plaintiffs will be able to sustain these actions against insurers based on
novel legal theories of liability.
With regard to environmental claims, we have received and continue to receive claims from policyholders who allege that they are liable for
injury or damage arising out of their alleged disposition of toxic substances. Mostly, these claims arise under various legislative as well as
regulatory efforts aimed at environmental remediation. For instance, the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), enacted in 1980 and later modified, enables private parties as well as federal and state governments to take action with respect to
releases and threatened releases of hazardous substances. This federal statute permits the recovery of response costs from some liable parties and
may require liable parties to undertake their own remedial action. Liability under CERCLA and similar state laws may be imposed on certain parties
even if they did not cause the release or threatened release of hazardous substances and may be joint and several with other responsible parties.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to environmental claims.
The Company believes that some court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and
policyholders. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction.
Uncertainties surrounding the final resolution of these asbestos and environmental claims continue, and it is difficult to estimate our ultimate
liability for such claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims
develop. The continuing uncertainties include, without limitation:
•
the risks and lack of predictability inherent in complex litigation;
•
any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants;
•
a further increase in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated;
•
the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from
medical advances and lifestyle improvements;
•
the role of any umbrella or excess policies we have issued;
•
the resolution or adjudication of disputes pertaining to the amount of available coverage for asbestos and environmental claims in a
manner inconsistent with our previous assessment of these claims;
•
the number and outcome of direct actions against us;
•
future developments pertaining to our ability to recover reinsurance for asbestos and environmental claims;
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