The Insurance Industry and Asbestos

Engineering Control of Dust Diseases 1932

Mr. Reuel Stratton, Supervising Chemical Engineer for the Travelers Insurance Company, made a presentation on May 12, 1932 at the Pennsylvania Safety Conference in Harribsurg, entitled “The Engineering Control of Occupational Diseases by Plant Equipment and Operation.”

Mr. Stratton noted at the outset of his speech that:

“The study to control the incidence of occupational or industrial disease by engineering is not at all new. As early as 76 A.D., Pliny recorded the fact that ‘Those employed in the works preparing vermilion cover their faces with a bladder skin, so that they may not inhale pernicious powder, yet they can see through the skin.’”

 

Further Mr. Stratton said:

“Undoubtedly, certain occupational diseases need not occur. The medical and engineering aspects of their control are now so well known that in the hands of capable plant officials there can be little excuse for occurrence. There are others, however, where a certain percentage of cases is to be expected, despite the utmost efforts of the plant physician and the engineer.”

 

Mr. Stratton spoke at length on dust diseases:

“While the term “pneumoconiosis” is applied to any respiratory disease caused through the inhalation of dust, the most common type of it in industry is “silicosis,” or silica poisoning. As the engineering control of silicosis embraces the essentials required, any suggested procedure will be understood to apply to all types of pneumoconiosis, the only difference being in the severity of the disease, the length of exposure required to produce it, and the free silica content of the material being processed or handled. In any study of plant operation producing such a disease the fundamental cause is the inhalation of dust, so that the problem is to control the production of dust, or to protect the workers against the inhalation of the dust.”

“Silica poisoning, or silicosis, has long been associated with quarrying and stone-cutting operations. Other dusts such as alumina, iron oxide, and asbestos should be regarded with suspicion.”

Two of the Engineering controls for dust mentioned in the speech are:

Housing: “Where practicable, dusty manufacturing processes should be separately housed and isolated, and every effort should be made to arrest dust at its source, to protect the employees… The location of a dusty operation in the open air does not eliminate its danger; in fact, it may increase the number affected.”

And

Ventilation: “Proper ventilation is of paramount importance in the control of any dust exposure. Each process should be studied separately and ventilated separately. It is not wise to rely upon general ventilation. Instead, high-velocity ventilation apparatus should be installed, functioning directly at the source of the dust.”

London Calling-Asbestos Dust Bad October 1900

The earliest evidence of knowledge in the United States of the hazards of asbestos dust is from a speech given in October 1900 at a convention of the International Association of Factory Inspectors of America held in Indianapolis, Indiana. In a speech entitled, The Dangerous Trades, Mr. W.E. Walling of Chicago, quoted at length from Great Britain’s Annual Report of the Chief Inspector of Factories and Workshops for the years 1898 and 1899. Excerpts from Mr. Walling’s speech:

“Dust- today we are apt to look at the breathing in of dust as our fathers did at the breathing in of germs. It seems an insignificant and ridiculous matter, but this is the reverse of the truth. One of the women inspectors of England says of the evil effects of dust:  ‘In the majority of cases the evil is very insidious and the general symptoms produced by dust on the various respiratory organs are to the lay mind so similar to those produced by other causes that it is not always easy to trace the connection.’”

Further quoting from a British Annual Report on Factories and Workshops, Mr. Walling said:

“Such instances can seldom be fully traced except with infinite labor and patience. The worker falls into ill-health, and sinks away out of sight in no sudden or sensational manner so that attention is seldom attracted to the ultimate source of the trouble.

“The evil effects of asbestos dust have also attracted my attention, a microscopic examination of this mineral dust which was made by H.M. Medical Inspector clearly revealed the sharp, glass-like, jagged nature of the particles, and where they are allowed to rise and to remain suspended in the air of a room, in any quantity, the effects have been found to be injurious, as might have been expected.”

Just pages away from a 1901 publication of the speech is a full page advertisement by The Fidelity & Casualty Company of New York, a half page advertisement for the Travelers Insurance Company and a half page advertisement for the New Amsterdam Casualty Company.

The New Amsterdam Casualty Company merged in the mid-1960s with the Security Insurance Company. In 2007, the Security Insurance Company merged with Arrowood Indemnity Company.

Marsh and Forster 1940s-1960s

In the mid 1940s Marsh & McLennan, the predecessor to Marsh, began conducting what it self described as “illegitimate business” on behalf of entities including asbestos litigation defendants such as Foster Wheeler Corporation, The Ruberoid Company and Chubb & Son.  For many years – the exact number or years has not been determined but at least exceeding 15 years – Marsh obtained insurance coverage for entities through fraudulent means through an entity in Canada in violation of state insurance laws of the United States. 

In the 1980s, Mr. J. Douglas Paterson testified that:  He was employed with the Forster Insurance Group in Canada until 1962.  Mr. Paterson held different positions over the years and traveled at times to the Marsh & McLennan offices in the United States. Mr. Paterson described the business of Forster during the years 1948 to 1962 as being a "facility or conduit” to channel Marsh & McLennan business into the London insurance market. 

Mr. Paterson described the umbrella insurance placement and renewal process as follows: Initially, Forster would obtain underwriting information regarding the insured. This information would be submitted by the Marsh & McLennan office handling the account in the form of a questionnaire or over the telephone. Mr. Paterson testified that this information was always provided by Marsh & McLennan. Mr. Paterson recalled working with several Marsh & McLennan employees from Marsh & McLennan 's New York office. Upon obtaining full underwriting information, Forster would send that information to London.

Forster's next involvement included receipt of price information, Mr. Paterson always forwarded this information to Marsh & McLennan. A cover note was sent on to Marsh & McLennan and eventually an official policy would be received, which was sent both to the client and Marsh & McLennan.

With respect to umbrella placements Mr. Paterson did recall in some instances "direct communications" with the client as opposed to Marsh & McLennan. Mr. Paterson characterized these communications as a sham intended to create the illusion that Forster was dealing directly with those clients when in fact all of its dealings were with Marsh & McLennan. He described this arrangement as a "subterfuge" intended to aid Marsh & McLennan in its evasion of domestic insurance laws precluding its placement of insurance in the London Market. He recalled that this subterfuge was in particular use by Marsh & McLennan 's New York office.

Mr. Paterson stated that with respect to all umbrella insurance placements Forster made on behalf of Marsh & McLennan during the 1948 to 1962 time period, Marsh & McLennan was the producing broker.  Mr. Paterson stated that it was his understanding-- as well as common knowledge at Forster during that time period--that the entire producer's commission was passed on to Marsh & McLennan.
By this arrangement, Marsh & McLennan was put in the same position it would have been has it been dealing directly with the London brokers.

Mr. Paterson stated that he was generally aware of the fact that at some time during the 1950's, Forster sent documents to the homes of Marsh & McLennan employees rather than to their business address. Mr. Paterson did not recall being personally involved in this practice but he understood it to be part of the subterfuge employed by Marsh & McLennan to disguise its involvement in the placement of the insurance.

Mr. Paterson stated that there has never been any question in his mind that Marsh & McLennan was the producing broker in the umbrella insurance placements which Forster was placing in the London market during the 1950's and that there has never been any question in his mind that Marsh & McLennan was receiving commissions on all of those placements.

Association of Casualty and Surety Executives 1935-1936

    In the 1930's the Association of Casualty and Surety Executives periodically published bulletins entitled, Bulletin of the Association of Casualty and Surety Executives. The following statement was on the cover of the bulletins: "The purpose of this Bulletin is to disseminate information bearing upon subjects of popular interest in the field of casualty insurance and suretyship and to answer the active propaganda for state intrusions into the field of insurance and of other lines of private enterprise."

    Some excerpts:

April 1935

    From Bulletin #40:  

    "Silicosis and Asbestosis in Great Britain- The following table is from a summary, published in Monthly Labor Review, December, 1934, of data relative to industrial diseases and poisonings contained in the Annual Report for 1933 of the Factory Department, Great Britain. The figures in the table are the statistics of deaths from silicosis and asbestosis that have been collected 'in the past few years'. The diagnosis in these cases has been confirmed by postmortem examinations." Here's the table.

July 1935

    From Bulletin #41:   

    "Silicosis and Asbestosis in Great Britain- The following data are from Workmen's Compensation-Statistics of Compensation and Proceedings, 1933 (Home Office, London, 1935).

    "In 1933, there were four "Schemes" for compensation for silicosis in force: The Refractories Industry Scheme (covering ganister mines and quarries and silica brick works); the Sandstone Industry Scheme; the Metal Grinding Industry Scheme; and the Various Industries Scheme (which covers a variety of processes in different industries, chiefly pottery, mining, silica or flint milling, stone masons, sand blasting and the mixing of ground silica).

    "Asbestosis also, in certain specified processes, was compensable under the Asbestos Industry Scheme, which took effect June 1, 1931. Under that scheme, £229 was paid in one fatal case and £539 in 18 disablement cases, in 1932; and £162 in 2 fatal cases and £1,136 in 24 disablement cases in 1933."

February 1936

    From Bulletin #43, excerpts from a review of the book "Industrial Medicine", by Clark and Drinker: 

    "Silicosis... presupposes a perfectly definite etiological factor, free silica or quartz, and embraces by far the greatest part of the morbid pathology for which dust inhalation is directly or indirectly responsible."

    "Of the silicates so far studied only asbestos (and possibly sericite) have the specific power to produce disabling fibrosis of the lung tissue."

September 1936

    From Bulletin #45, excerpts from a quote by Dr. Le Roy U. Gardner. Dr. Gardner made the folowing statement on October 1, 1935:

    "Pneumoconiosis should be defined as a condition of the lungs resulting from the prolonged inhalation of dust. Only when this condition is due to a type of dust capable of producing serious and progressive changes in the lungs can a pneumoconiosis be considered a disease. At the present time only two kinds of dust are generally recognized as possessing such irritating properties, Silica, commonly found in nature as quartz, is a notorious offender, and asbestos, a silicate of magnesium is as bad if not worse...

    "What constitutes an 'adequate exposure'? A man must be exposed day after day for a period of years to relatively high concentrations of dust. In the usual industrial concentrations of silica dust it takes from 5 to 20 years to produce silicosis; and from 7 to 11 years in asbestos to produce asbestosis. In rare cases, where the dust concentration is excessive, the time may be shortened to 2 years."

Insurance Brokers 2.0 1937

In the summer of 1937 the official publication of The Insurance Brokers' Association of New York published an article entitled "What of the Dust Danger Now?" by Mr. W. G. Hazard of the Owens-Illinois Glass Company.

The article first identifies the nine costs of a dust control program.

"Those costs are interesting because they are exactly what large corporations experienced in the five year period just past:
1. Dust survey and dust counts.
2. Change in processes.
3. Change in building structure.
4. Housekeeping facilities.
5. Dust collecting systems.
6. Respirators.
7. Education of workers.
8. Inspection and enforcement.
9. Medical Service."

Hazard states that during the last few years, "Gradually the work of engineers and lawyers was combined with that of equipment manufacturers in definite managerial efforts to reduce exposure and prevent injuries. It is safe to say that every large corporation facing the silicosis problem has investigated the developments in equipment or structural design offered to eliminate all pulmonary diseases."

Hazard further states that:

"One of the most fruitful sources of information for the small company is its insurance carrier. General insurance companies have an engineering and medical service that is outstanding."

Two of the directors for the Insurance Brokers' Association of New York in 1937 were Laurence S. Kennedy of Marsh & McLennan, and L. A. Wallace of Johnson & Higgins.

In addition, Kennedy and Wallace served on the Association's Legislative Committee. Joseph Geoghegan of Marsh & McLennan served with Wallace on the Casualty and Surety Committee.

Owens-Illinois manufactured asbestos insulation products during the 1940s and 1950s.

Insurance Brokers 1935

In the summer of 1935 the official publication of The Insurance Brokers' Association of New York published an article by Henry Sayer entitled "Occupational Diseases." Here is an excerpt:

"One aspect of the occupational disease problem relates to the so-called dust diseases. There have been described by medical men in recent years conditions known as silicosis, asbestosis, pneumoconiosis and siderosis, all being dust diseases due to the inhalation of inorganic dust. Dust is an accompaniment of most industries, certainly a very large proportion of them. We find it not only in the stone-cutting and rock drilling industries, we find it in the factories, in the foundries, grinding processes and the silicosis rate is very high in some of these places. No one knows how high, but it had been estimated in terms of a high percentage of the employees. It is a disease that does not make itself known early, perhaps until after five or more years of occupational exposure."

Two of the directors for the Insurance Brokers' Association of New York at that time were Laurence S. Kennedy of Marsh & McLennan, and L. A. Wallace of Johnson & Higgins.

Marsh and Engineering Pre-1928

Before the 1930s, Marsh & McLennan employees were members of such engineering organizations as:

The American Society of Safety Engineers,

The American Society of Mechanical Engineers,

The American Institute of Electrical Engineers, and the

American Electric Railway Engineering Association.

1914

Here are excerpts from a 1914 Safety Engineering Journal article entitled, "Safety First" in Equitable Building:

"A gigantic building housing the population of a small city in the construction of which every piece of fireproofing material has been tested at 1,800 deg. F.; in which any fire is automatically isolated and the alarm given by means of the most elaborate intercommunicating fire alarm system ever planned and installed; wherein the life and property of every tenant is afforded absolute protection - in the design of which the art of fire-resistive construction and fire-protective equipment has been of first consideration."

"In commenting on insurance engineering in connection with the Equitable building, B. E. Loomis, chief engineer of the firm of Marsh & McLennan, to whom the working out of all details of fire-resistive materials and devices was entrusted said in part: 'In designing the fireproofing and fire protection of the Equitable building, it has been our aim primarily to properly cut off all vertical openings in the building and, in so doing, to use materials that we know will stand a temperature of at least 2,000 degrees... The sub-dividing partitions, doors, locks, hinges, door frames, door bucks, and, in fact, every detail that has entered into the construction of this building, have been known to successfully resist temperatures equivalent to the heat of a conflagration, and every one of these details has the Underwriters' approval as being the highest type of fireproof materials.'"

The elevator doors are described as "pocketed behind tile walls and operate by fusible links. They are made of two walls of cross-laid 22-gauge galvanized steel with air spaces and sheet asbestos between."

The article also contrasted the safety features in the new Equitable Building and the old Equitable Building. The new building has elevators with "brick shafts, metal cars and fire-doors of steel and asbestos."

1921

In a 1921 Safety Engineering issue the following is noted as to the Chicago Safety Council:

"This is a wide-awake organization which functions under the direction of an advisory committee, of which William Otter of Marsh & McLennan is chairman..."

"Its activities are divided into four major divisions known as Public Safety, Industrial Safety, Railroad and Public Utilities and Business Administration..."

"In a recent bulletin the Chicago Council said: 'Industrial managers and safety engineers who have had the widest experience in accident prevention are convinced that the industrial accident problem can never be solved and the public accident problem cannot even be touched until safety is incorporated into the community life and is organized just as there is organized health or any other activity having for its purpose the conserving of human life."

Marsh a.k.a. Marsh & McLennan 5.0 - Johns-Manville Lawsuit

In Marsh's annual report for 1984 in a section entitled "Claims and Lawsuits" is background information on a lawsuit filed by asbestos product manufacturer Johns-Manville against Marsh:

"Subsidiaries of the Company are defendants in a lawsuit filed in November, 1981, in state Superior Court in San Francisco, California entitled "Johns-Manville Corporation, et al. v. Marsh & McLennan, Incorporated, et al." Johns-Manville was sued in a large number of cases brought by persons alleging damages for asbestosis or other asbestos-related diseases. These claims against Johns-Manville are now stayed by virtue of Johns-Manville's filing for reorganization pursuant to Chapter 11 of the Bankruptcy Code. Johns-Manville is also a plaintiff in an action in which it seeks reimbursement under insurance policies from a number of insurance companies for its losses, costs and expenses arising from the claims made against it in such cases. The action against Marsh & McLennan constitutes an attempt on the part of Johns-Manville to obtain damages from Marsh & McLennan which would reimburse Johns-Manville to the extent reimbursement for the full amount of its losses, costs and expenses in the asbestos-related cases is not recovered from the insurers. The lawsuit also seeks injunctive relief, a declaratory judgement, exemplary damages, and reimbursement of certain expenses."

"Johns-Manville's action against its insurers and its action against Marsh & McLennan have been procedurally coordinated with the insurance coverage claims of four other asbestos manufacturers in a proceeding entitled "In Re Asbestos Insurance Coverage Cases" pending in San Fransisco state Superior Court. In August, 1983, Marsh & McLennan field an action in San Fransisco state Superior Court against Sedgwick Company plc and various of its subsidiaries seeking indemnification for certain of the claims by Johns-Manville against Marsh & McLennan."

"Johns-Manville's filing under Chapter 11 of the Bankruptcy Code is not expected to affect the substantive legal rights of the parties or the question of possible liability of the subsidiaries of the Company named as defendants. Marsh & McLennan has denied the allegations in the lawsuit by Johns-Manville and is defending the action vigorously. The trail of this action is scheduled to begin on March 4, 1985."

The lawsuit eventually settled with Marsh agreeing to pay Johns-Manville $29.75 million dollars.

The National Council On Compensation Insurance 2.0

The National Council on Compensation Insurance held their 1938 annual meeting at the NCCI's New York City offices on December 1, 1938. Members present included: Aetna Casualty and Surety Company, Aetna Life Insurance Company, Continental Casualty Company, Fidelity and Casualty Company of New York, Hartford Accident and Indemnity Company, Liberty Mutual Insurance Company, Maryland Casualty Company, and Sun Indemnity Company of New York (today's Chubb Indemnity). At the meeting the NCCI's occupational disease program was discussed. A report on the meeting noted that:

"There has been little change in the status of the occupational disease rates adopted in 1936 by the Special Committee on Occupational Disease." By 1933, the NCCI had a table of occupational disease rates which included asbestosis. An earlier blog entry on the NCCI can be found here.

In addition, a specific NCCI activity in Illinois was noted in the report of the 1938 annual meeting:

"In accordance with the provisions of Section 6 of the Illinois Act relating to the assignment of risks, the National Council, as the designated central agency, has been collecting for future hazard relativity determination purposes, the required engineering and medical data in connection with risks which have been assigned for coverage under the Illinois Uninsured Risk Plan involving the silica and asbestos occupational disease hazards... During the time in which the Council was authorized to collect these data, nine risks came to its attention involving the hazards of silica and asbestos."

"Asbestos Dust... is One of the Most Deadly" - 1902

Here is some of what was known about occupational dust diseases more than 100 years ago. Previous blog entries on this subject can be found here.

In 1900 the book The Risks and Dangers of Various Occupations and Their Prevention written by Leonard Parry was published. The following are some excerpts from Chapter One which is entitled "Occupations Which are Accompanied by the Generation and Scattering of Abnormal Quantities of Dust."

"When much dust arises in any particular occupation and is breathed in, it passes right into the lungs, and it is to this fact that the industrial dangers are all due."

"It has long been a recognised [sic] fact that to breathe in for any considerable time minute solid particles is productive of various diseases of the organs of respiration, such as bronchitis, asthma, chronic pneumonia, and chronic phthisis (consumption), whatever may be the origin of the atoms entering the lungs, some much more seriously and much more quickly than others."

"The avoidance of the appalling mortality from dusty occupations, if it cannot be done away with, may certainly be diminished by the adoption of a few common-sense precautions. They may be summed up in a few words: lessen the amount of dust produced or scattered, and prevent that which is scattered from getting to the lungs. To accomplish this object, the ventilation of all rooms and workshops in which dust is generated in large quantities should be carried out in a thorough, efficient, and scientific manner, and all the sanitary arrangements should be as perfect as possible; for it is important that the workman should keep his health at the highest pitch possible, in order that he may be able to resist the attack of the dusty atoms on his lungs."