Asbestos and silica. Silicone breast implants and other medical devices. Lead paint. Pesticides. Environmental contamination.

These are just a few exposures that have led to billions of dollars in losses, forcing many companies into bankruptcy. With a well-organized plaintiffs’ bar, aggressive regulators, and an alarmist mass media poised to bring a potential danger to the public’s attention at a moment’s notice, the risk of significant exposures to mass tort and complex liabilities is likely to continue to be part of doing business for some time.

Mass torts and complex liability exposures can be triggered by several different events, from defective products, to pollution, to accidents involving a large number of people. No one knows what will set off the next wave of mass tort litigation. Silica-related claims are on the rise. Pressure-treated lumber and mold are other potential sources of litigation. Regulatory authorities are more aggressively pursuing natural resource damage claims. Even lead paint, once thought to be a mass tort of the past, is fueling litigation as plaintiffs purse retailers and other parties not involved in the first round of lead paint litigation. And today, not only manufacturers are held liable for defective products. Distributors and retailers have also been named in lawsuits.

While it’s virtually impossible to predict what will be the next source of mass tort litigation, it is possible to assess and manage mass tort-related risks.

What Will You Say When They Ask What Happened?
To properly assess the risk of exposure to mass torts and complex liabilities, you should start by asking several questions. For example:

• Are we exposed to mass torts or other complex liabilities?
• If we do have exposure to mass tort and complex liabilities, have we accurately calculated the scope and potential impact of these liabilities?
• Does our current insurance adequately protect us from potential product liabilities, mass torts, and environmental claims, as well as other forms of complex legal liabilities?
• With respect to our historical insurance program, do we know where our old insurance policies are and understand their terms and conditions? Have we assessed our historical liability policies to determine the value of our insurance assets?
• If we cannot find old policies, do we have secondary evidence of coverage?
• Have we acquired or merged with a company that now exposes us to mass torts and complex liabilities?
• Do we know which policies will be applicable to certain liabilities?
• Do we have the financial and statistical mechanisms in place to track our mass tort and complex liabilities and to ensure that we are collecting all insurance and other payments we are due?
• Have we adequately investigated the availability of post-loss risk transfer and other funding mechanisms available to lessen the financial impact of our mass tort and complex liability exposures?