In April 2011, contractors were hired to repair the aging Surrey nuclear power plant in Southeastern Virginia. Individuals in charge of plant safety assured the contractors that there were no asbestos exposure risks involved in the project, as all of the asbestos in the plant’s pipes had been abated, or else contained clear warning signs indicating the presence of asbestos.

When contractors began work replacing the pipes in the reactor’s turbine building, there were no asbestos warning labels present on the pipes. However, as workers began to cut into the pipes, a fine, particle-like substance filtered into the air – landing on the contractors’ clothing and permeating the air they were breathing. After following the pipes down two floors, they discovered an asbestos warning label.

Because the nuclear plant’s owner had no air sampling equipment present at the time of the incident and state investigators didn’t arrive until three days after the incident, investigators are unsure as how much asbestos the contractors came in contact with. However, reports from the State Department of Labor reveal that asbestos fibers were found on 12 workers, as well as three work trailers.

Asbestos is a dangerous mineral fiber used heavily in manufacturing between the 1920s and the 1970s, despite warnings that the fibers could cause respiratory problems, as well as life-threatening cancers. Many companies began eliminating the use of asbestos in the 1980s before it was finally banned permanently in the early 1990s. Unfortunately, contractors remain at increased risk for exposure to the mineral when working on old structures built using asbestos, such as the Surrey nuclear power plant.

Doug Larkin, co-founder of the Asbestos Disease Awareness Organization, notes that state and federal oversight of company compliance with asbestos safety laws needs improvement. Larkin says that there are too few inspectors available to ensure public and worker safety, and with regard to the Surrey nuclear plant incident, he says, “It’s incredible that people are still being exposed today. This type of behavior is absolutely appalling.”

Asbestos inhalation and ingestion is directly responsible for the development of mesothelioma in thousands of people each year – many of whom do not develop the disease for several decades following initial exposure to asbestos. Mesothelioma is an aggressive cancer with no cure, and it’s almost always fatal.

The state fined Quality Specialties Inc. $4,900 for improper pipe labeling at the Surrey nuclear facility, but that doesn’t necessarily indicate that further accountability will not be required of Quality Specialties Inc., plant owners or other companies involved in the hazardous asbestos exposure incident. Apparently, the contractors are currently exploring their legal options regarding the event. According to Dr. Arthur Frank, chair of Drexel University’s Department of Environmental and Occupational Health, the workers “are at an increased risk, but it’s hard to say if they’ll develop diseases. Only time will tell.”

Rising mesothelioma claims are catching insurers off-guard, according to a recent report from the Reuters News Agency.  Both AIG and Hartford Financial made announcements of aggressive, multi-billion dollar funding of capital set aside for current and future mesothelioma claims in 2011. The decisions, though one-time events, have resulted in overall company losses and uneasiness for investors worried about underfunding for mesothelioma claims, as well as company profits.

Many cases of mesothelioma are due to negligence on behalf of companies who knew of the dangers of asbestos exposure, yet continued to profit from use of the mineral in consumer products and in the workplace. Individuals exposed to asbestos who later develop mesothelioma often receive a poor prognosis – with few living more than a year following diagnosis.

Furthermore, mesothelioma has a long latency period following exposure to asbestos. Some individuals will not develop the disease for several decades following exposure, leaving insurers uncertain of the value and extent of future claims. This dilemma, along with the increased costs of emerging mesothelioma treatments, has forced insurers, such as AIG and Hartford Financial, to brace themselves for big liability payouts.

However, it seems that AIG dodged a bullet. Amid worries of underfunding, in August 2011, billionaire Warren Buffet agreed that his investment firm, Berkshire Hathaway, would assume AIG’s future mesothelioma liabilities in exchange for a one-time payment from AIG worth $1.65 billion. This means that Berkshire Hathaway will pay for all future mesothelioma claims on behalf of AIG, but in the mean time, can invest the money to leverage profits before any claims payments are made.

It’s not the first time Berkshire Hathaway has assumed liability for an insurance company’s mesothelioma claims. In fact, this is the smaller of two other similar deals that were reached in 2006 and 2010 for asbestos-related liabilities on behalf of the Equitas affiliate of Lloyd’s of London and CNA Financial Corp. There’s no word on whether Berkshire Hathaway will engage in a similar transaction with other troubled insurers, such as Hartford Financial, though the investment firm has previously expressed interest in similar risk-transfer investments.

For now, however, AIG investors and mesothelioma claimants with lawsuits against AIG-insured companies can rest easy. Berkshire Hathaway will be footing the bill for all future claims, and investors can be sure that AIG will not be reserving large quantities of company funding for future mesothelioma claims.