Senate Republicans Side With Insurers

By Steven Brostoff, Washington Editor

NU Online News Service, July 31, 10:43 a.m. EDT,Washington?Despite voting in favor of the controversialasbestos reform bill, S. 1125, five Republican members of theSenate Judiciary Committee are expressing concerns over thelegislation, including its impact on insurance companies.

According to a draft obtained by National Underwriter,the five senators say the legislation "poses some troublinginequities for insurers."

In particular, they say, the provision calling for additionalfunding to assure that the Asbestos Claims Resolution Fund does notrun out of money is unfair to insurance companies.

The draft represents reservations over the legislation that,when finalized, will likely be attached to the JudiciaryCommittee's final report on S. 1125.

The senators signing the draft include Charles Grassley, R-Iowa,Jon Kyl, R-Ariz., Jefferson Sessions, R-Ala., Larry Craig, R-Idaho,and John Cornyn, R-Texas.

The additional funding provision calls for insurance companiesand defendants to contribution an additional $45 billion to thefund, with $22.5 billion coming from insurers, on top of the $108billion called for in the legislation to provide the basefunding.

However, the draft says, the insurance industry's $22.5 billionshare of the add-on will fall to only a few dozen participantinsurers, while the defendants will be able to spread their shareover thousands of companies.

"While our goal is not to protect the insurers, this is not areasonable allocation," the draft says.

In addition, the draft says, they are concerned about collusivedefault judgments against insurers. These default judgments, thedraft says, involve agreements between plaintiffs and defendants inwhich defendants agree not to contest certain claims in exchangefor an agreement by plaintiffs to enforce the judgment only againstinsurers.

The draft calls for language preempting collection of thesejudgments against insurers. In addition, the draft says thatlanguage should be added to the bill prohibiting all direct actionagainst insurers. This, the draft says, would assure that insurersenjoy the same kind of certainty that defendants and claimantsreceive under the bill.

The draft also calls for reconsideration of claims values,particularly in the area of mixed causation. The draft notes thatunder the legislation a person whose medical condition may havebeen caused by multiple industrial elements is entitled to $20,000in compensation.

Thus, the draft says, even though a claimant's injuries may havebeen caused by something other than asbestos, the claimant canobtain an award simply by showing exposure. Moreover, the draftsays, smokers can obtain large awards for lung cancer that medicalscience conclusively links to smoking, not asbestos.

Payments under these circumstances, the draft says, couldrapidly bankrupt the fund.