Estimates of the size of COVID-19’s impact on the insurance industry vary widely, but some companies (including Chubb and Willis Re) have suggested that, considering both asset and liability losses, it will be the largest event in insurance history. In the sense of the size of industry loss, then, the coronavirus appears to be the latest candidate for the “next asbestos.”

Unlike asbestos, which emerged through the U.S. legal system, early estimates for general liability losses from COVID-19 are lower than the predictions from business interruption or event cancellation lines. As an infectious disease spreading widely though the population, it seems challenging to blame infections on the actions or products of specific companies. Therefore, it may, at first glance, appear destined to only result in modest losses for general liability. A deeper review of the risk, however, suggests there are some precedents that could portend a larger loss, and they come precisely from asbestos.

Many of the innovations in tort law, the underlying legal system driving liability risk, have come from asbestos. After several scientific studies in the 1960s found that insulation workers had elevated risk of asbestos-related diseases, the Eastern District of Texas court established in 1971 (Borel v. Fibreboard Paper Products) that insulation workers could sue the product manufacturers responsible for putting the asbestos in the product. This innovation in tort law launched a major wave of asbestos litigation driving general liability losses in the 1970s.