Business Backs Off Congress-Backed Asbestos Fund

By Arthur D. Postal, Washington Bureau Chief

NU Online News Service, April 5, 4:18 p.m.EDT?Business support for legislation creating a trust fundto deal with asbestos exposure injury claims appears to be eroding,while interest by Republican senators in passing such legislationseems to be growing.[@@]

At the same time, a Utah Republican congressman said he willshortly introduce legislation in the House establishing medicalcriteria for processing such claims.

Rep. Chris Cannon said in a letter to colleagues seekingco-sponsors that his legislation represented a "common senseapproach to asbestos reform." But an insurance lobbyist who askednot to be identified by name cautioned that there was no linkagebetween the letter to Sen. Arlen Specter, R-Pa., chairman of theSenate Judiciary Committee, and Rep. Cannon's bill. The industryofficial noted that Rep. Cannon had introduced similar legislationtwo years ago.

In their letter to Sen. Specter last week, 15 large insurers,including Chubb, AIG and White Mountain, voiced support for such analternative approach to handling asbestos claims.

Meanwhile, efforts by some insurers to stop Ace Ltd. fromreducing its potential asbestos and environmental liabilities byselling off certain reinsurance runoff units appears to beundiminished even though a suit seeking to do so was dismissed lastmonth by a California court.

In the latest action in that regard, 30 insurers have writtencomment letters to the Pennsylvania Department of Insuranceopposing the acquisition of ACE American Re Co. by Randall &Quilter Investment Holdings Ltd. of the United Kingdom. The commentperiod on the proposed acquisition closed today. Ace asked forPennsylvania approval of the divestiture Feb. 18.

Other commentators include law firms representing Allstate, AIG,CHUBB & Son and St. Paul Travelers; letters from defendantsGeneral Refractories Company and Mine Safety Appliances Company;and law firms representing Insurance Company of North America andLiberty Mutual Insurance Company.

In their letters, the various parties argued that thetransaction as proposed "would have a significantly unfair andunreasonable effect upon policyholders and reinsurance cedants andis not in the best interest of the insurance-buying public or theU.S. industry. There is no deadline for the Pennsylvania departmentto handle the application, according to a departmentalspokesperson.

In the congressional arena, the letter to Sen. Specter says hiscurrent rendition of asbestos legislation, while an improvementover previous versions, "leaves too many issues unresolved" tojustify industry support.

A business lobbyist said business defendants will also send Sen.Specter a letter soon raising the same concerns, such as thecurrent draft would require them to pay too much money and not givethem enough assurances that their contributions to the trust fundwould close the spigot on asbestos claims outside theadministrative claims process created by the legislation.

But Sen. William Frist, R-Tenn., the majority leader, saidTuesday that he was confident a bill setting up a national fund topay a flood of asbestos injury claims would be on the Senate floorsoon, despite insurers' calls to try to resolve the problem in thecourts.

"I am confident we will have a bill, a bipartisan bill thatcenters on a trust fund, on the floor of the Senate in the not toodistant future," Frist, a Tennessee Republican, told reporters in abriefing on the Senate floor, according to Reuters.

He said he was not discouraged that some insurance companies hadwritten again to complain about Sen. Arlen Specter's draft bill.Sen. Specter's bill would take asbestos claims out of court and paythem from a $140 billion trust funded by business and insurers.