Reject Asbestos Bill, Industry Execs Say

By Steven Brostoff, Washington Editor

NU Online News Service, Sept. 12, 3:40 p.m. EST,Washington?The insurance industry must present a unitedfront in opposing S. 1125, the "hopelessly flawed" asbestoslitigation reform bill, three top industry executives say.

Charging that "certain insurers" may be prepared to support thelegislation, and creating the impression that the rest of theindustry does also, the executives called for the industry to"firmly and unequivocally reject this approach."

Signing the letter were Maurice R. Greenberg, chairman of NewYork-based American International Group; John Degnan, vice chairmanof Warren, N.J.-based Chubb; and Joseph Brandon, chairman ofStamford, Conn.-based General Reinsurance.

"We believe the industry as a whole has no alternative but tooppose this legislation and to cease all ill-fated attempts torevive it," the letter says.

"We would prefer to continue to fight our claims in the currenttort system, despite the excessive costs and unfairness of doingso," the letter adds.

The occasion for the letter was a meeting Wednesday morning ofthe presidents of the five major property-casualty companyassociations to discuss the asbestos issue.

They are Franklin Nutter of the Reinsurance Association ofAmerica, Larry Forrester of the National Association of MutualInsurance Companies, Jack Ramirez of the National Association ofIndependent Insurers, Robert Vagley of the American InsuranceAssociation and Rodger Lawson of the Alliance of AmericanInsurers.

The letter says that enactment of an affordable asbestos trustfund, a trust fund being at the heart of S. 1125, is not possibleat this time.

"We need alternative legislation that addresses the issues sotroublesome to most insurers and reinsurers," the letter says.

The letter reads that, "We need venue reform to streamline theprocess and to assure fair legal judgments. We need standardizedmedical criteria and claims values. And we need limitations onlegal expenses,"

S. 1125, the letter notes, fails to cap insurer and reinsurercontributions at $45 billion, which was the amount originallyproposed. Costs to insurers and reinsurers are now estimated to bemore than $75 billion over the 50-year life of the fund, with nofirm cap.

"This amount is inequitable and unaffordable," the lettersays.

In addition, according to the letter, S. 1125 does not achievefinality and certainty in asbestos litigation. The insuranceindustry is left with an unknown number of claims that eitherremain in or may revert to the tort system.

Finally, the letter says that while the trust fund could ceaseoperating at any time for any number of reasons, insurers wouldstill bear the costs of the current litigation system, even aftercontributing to the fund.

"We have concluded that passage of this or any similar bill isneither possible nor desirable," the letter says.

Sources told National Underwriter that some four orfive insurers, which were not named, have been meeting to try andfind ways to salvage S. 1125. The sources said these companiesbelieve they need legislation and that the process is too far alongto find an alternative to S. 1125.

But industry representatives say they do not see any way that S.1125 can pass. Robert Rusbuldt, chief executive officer with theAlexandria, Va.-based Independent Insurance Agents and Brokers ofAmerica, said that based on everything he has heard from CapitolHill, S. 1125 is no longer a front-burner issue.

As of now, he said, most of the industry is focusing onclass-action reform legislation and finding the last three or fourDemocratic senators needed to get the legislation approved in theSenate.

Mr. Rusbuldt said he does not see how a trust fund bill thatmeets the industry's need for certainty and finality can emergefrom this Congress.

There are only two ways to achieve certainty and finality, Mr.Rusbuldt said. The first is for the federal government to assumeresponsibility for any claims that cannot be paid by the trustfund. That, he said, is unacceptable to Republicans.

The second is to simply say "tough luck" to claimants should thetrust fund run out of money. That, he said, is unacceptable tolabor unions and Democrats.

As for the meeting of the trade association executives, JenniferGibson, director of federal affairs with NAMIC, said theassociations agreed to coordinate their activities and to develop aunited document outlining their objections to S. 1125 fordistribution on Capitol Hill.