Insurers Unify On Asbestos Bill Aims

By Steven Brostoff, Washington Editor

NU Online News Service, 0ct. 6, 10 :42 a.m.EDT, Washington?The insurance industry has developed a unifiedposition on asbestos reform legislation.

According to an outline provided to NationalUnderwriter, the industry, including all the primary companyassociations as well as reinsurers, now agrees that any asbestosreform legislation based on a trust fund concept must containseveral elements.

First, the industry says, the industry's liability must becapped at $45 billion, which will be funded by a $28 billion (netpresent value) payment.

Second, there must be no contingency funding beyond the basefunding. If the base funding is inadequate to meet actual claimsexperience, the industry says, the residual claims should beresolved in a modified tort system.

Third, the industry says that the trust fund must be theexclusive remedy for all asbestos-related claims. All tort systemclaims must be preempted.

Claims filed while the trust fund is starting up should behandled administratively, the industry says.

In addition, the industry says, there must be statutorylimitations on attorneys' fees.

Finally, the industry says, allocation of funding liabilityamong insurance companies must equitably reflect exposure to andliability for actual asbestos-related claims based on a commonmethodology, common assumptions, and consistent application of themethodology and assumptions performed by independent actuaries.

Industry groups supporting the principles include the NationalAssociation of Mutual Insurance Companies, the National Associationof Independent Insurers, the American Insurance Association, theAlliance of American Insurers and the Reinsurance Association ofAmerica.

Prior to the agreement on principles, there had been a split inthe industry over the legislation currently pending in the Senate,S. 1125.

S. 1125, as originally drafted, would have created a $108billion trust fund to resolve asbestos-related claims, with $45billion coming from the insurance industry.

However, after being amended by the Senate Judiciary Committee,the cost to the industry rose to some $57 billion up front, withpotentially unlimited residual liability should the fund run out ofmoney before all claims were paid.

In addition, S. 1125 would still allow some victims to pursuetheir claims in court.

Most of the industry opposed S. 1125 as unaffordable andunworkable, but a small group of companies tried to find a way tosalvage it by tinkering with some of the interest rateassumptions.

The agreement on the set of principles means that the industrywill be able to present a united front on Capitol Hill in ongoingefforts to reform asbestos litigation.