General Electric Co. has lost a decade-long battle with its insurers over payments for thousands of asbestos claims. In a decision released last month, the New York State Court of Appeals, the state’s highest appellate court, upheld lower court rulings preventing GE from tapping secondary insurance to cover claims brought mostly by individuals exposed to asbestos-insulated turbines. To date, GE has paid more than $500 million to settle asbestos cases. According to GE, 509,000 asbestos claims are pending against the company through 2006. As previously reported, GE did not make the asbestos, but used it to insulate turbines.
The lawsuit centered on whether GE’s asbestos claims should be treated as one incident under its insurance policies issued between 1965 and 1985, or whether each claim should be treated individually. GE was responsible for the first $5 million in coverage on each occurrence. After the first $5 million, GE could access more than $2 billion in secondary insurance. GE argued that the claims were one occurrence, allowing it to tap the excess insurance. The court ruled that each claim was a single occurrence, which limited GE’s access to the insurance, since few individual claims exceed $5 million. GE’s primary insurer, Electric Mutual Liability Insurance Co., a GE affiliate, became insolvent in 1995. GE took a $115 million after-tax expense as a result of its Asbestos lawsuit loss.
Source: Associated Press
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