Suffolk Superior Court applies continuous trigger and pro rata allocation to asbestos coverage dispute

Timothy Ross was exposed to asbestos from 1965 to 1977 while employed by NEIC.  He developed symptoms related to the exposure in 2012, and died from mesothelioma in 2013.  

After Ross's death, his widow sued NEIC.  Liberty Mutual insured NEIC from 1973 to 1983.  It asserted that a continuous trigger and pro rata allocation theory applied.  Under a continuous trigger theory, coverage is triggered from the time of exposure to a hazardous substance to the time when physical harm from such exposure becomes manifest.  In pro rata allocation, in a long-tail loss the loss is allocated among all insurers who provided insurance during any time the loss was occurring, and the loss is frequently allocated to the insured for periods where it had no or insufficient insurance.  So Liberty Mutual was arguing that where it provided coverage for ten years out of 47 years of total exposure, it was liable for about a fifth of the total damages.

In Ross v. Liberty Mutual Insurance Co. (behind a paywall) (Suffolk Superior Ct. May 14, 2025, Kazanjian, J.) a judge of the Suffolk Superior Court agreed with Liberty Mutual.  The court accepted expert testimony that damage from asbestos fibers is continuous—from initial exposure through latency, diagnosis, and death.  Relying on Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (2009) and New England Insulation Co. v. Liberty Mut. Ins. Co., 83 Mass. App. Ct. 631 (2013), the court held that coverage is triggered across all policy years during which injury occurred. It rejected Ross’s argument that injury was not continuous during the latency period and found that Liberty Mutual’s pro-rata allocation was consistent with Massachusetts law.

The court rejected Ross’s claim that Liberty Mutual owed post-judgment interest on the full judgment. It ruled that the insurer was responsible for interest only on the portion of the judgment that was allocable to its coverage periods. 

New York trial court orders reinsurers to pay USF&G $246 million plus interest

Insurance attorneys talk about reinsurance cases in the same manner that divorce attorneys talk about probate court: it's a world unto itself, with its own language, rules and folkways, and not a place where one necessarily wants to wander without a guide.

Reinsurance is insurer's insurance. An insurer purchases reinsurance to protect itself from unusually high losses. For example, an insurer providing property coverage to many insureds in an area devastated by a hurricane might turn to its reinsurer to cover aggregate losses over a certain amount.

This week a major reinsurance decision was issued by a New York trial court. Although Massachusetts law is not discussed, I am writing about it here because the case illustrates issues that often come up in long-tail loss cases, including lost policies, business successions, allocation and trigger disputes, and cost-benefit analyses by insurers about when to stop fighting and start settling. And because anyone interested in the insurance world should be aware of a case in which a court orders this much money to change hands from one insurer to another.

Between 1948 and 1960 insurer USF&G issued a number of liability policies to Western Asbestos, which sold products containing asbestos.

In the mid-1960's, Western MacArthur purchased most of the assets of Western Asbestos and took over its business.

In the late-1970's, individuals injured by asbestos began suing Western MacArthur in its own right and as successor to Western Asbestos.

In 1993 Western MacArthur inititated in California a coverage action against USF&G and two other insurers, seeking coverage for the asbestos cases.

USF&G argued that Western MacArthur did not have standing to assert coverage under policies issued to Western Asbestos. To defeat that argument, Western MacArthur found a former officer of Western Asbestos and persuaded him to sign an assignment of insurance rights to Western MacArthur. Western MacArthur also convinced a California court to "revive" the long-defunct Western Asbestos to ratify the agreement. Western Asbestos intervened in the coverage litigation as plaintiff. The court ruled that USF&G lacked standing to challenge the purported assignment of insurance rights to Western MacArthur.

Neither Western MacArthur nor USF&G could locate the policies at issue. The plaintiffs presented "secondary evidence" that USF&G's lost policies provided products coverage without aggregate limits.

As a side note, Michael Aylward of Morrison Mahoney LLP circulated this fascinating, quirky article on how the plaintiffs proved coverage under lost policies.

At that point USF&G decided to engage in global settlement discussions.

In June, 2002 the parties reached a settlement agreement under which USF&G agreed to pay $975 million plus interest.

USF&G then sought coverage from its reinsurers, American Re and ECRA. That brings us to state court in New York, in the case of United States Fid. & Guar. Co. v. Am. Re-Ins. Co..

This week the court denied summary judgment to the reinsurers and granted summary judgment to USF&G, and ordered the reinsurers to pay USF&G $246 million plus 60 percent interest.

Although I'm not going to discuss the court's reasoning, I would be happy to forward a copy of the decision to anyone who wants it (thanks again to Mike Aylward who forwarded it to me and the rest of the people on the Massachusetts Reinsurance Bar Association email list).