Hurdles Remain For National Asbestos Fund

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By Michael Ha

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NU Online News Service, June 24, 3:26 p.m. EDT, NewYork?Proposed legislation to create an asbestos nationaltrust fund has been gaining support from asbestos victims,defendant companies, insurers and labor unions, but many obstaclesand significant differences of opinions remain, according to anindustry expert.

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"There are so many complicated issues, but there are also somany people who really want to get this done," said Trish Henry,senior vice president of government affairs for ACE Inc., in abriefing for regulators here.

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Ms. Henry provided her update on the issue at the industryliaison committee session during the National Association ofInsurance Commissioners summer meeting.

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The proposed national fund would compensate all victims who havebeen exposed to asbestos and are showing impairment signs, such aslung function impairments, as well as all plaintiffs who have notyet reached final settlements or final judgments.

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Those who have been exposed to asbestos but do not haveimpairments would be put under medical monitoring, Ms. Henryexplained to the committee.

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She added that it is important that only those who have actualimpairments be able to tap into the fund, citing a recent examplefrom Mississippi where five plaintiffs were awarded $25 millioneach even though none of them showed any impairment symptoms.

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Ms. Henry also said that determining which insurer or defendantcompany would pay how much for the national fund has proven to be a"painful process," noting that the Fairness in Asbestos InjuryResolution Act of 2003 (S. 1125), introduced by Sen. Orrin Hatch(R-Utah) late last month, does not spell out how contributions tothe fund would be made.

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"We need a better allocation model," she told NAIC members.

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Ms. Henry also noted that this is an unusual situation in that"a lot of times you don't have this sense of urgency and thisbroad-based commitment to try to make this trust fund work, butthere are a lot of outstanding issues still to be decided. So eventhough there is the momentum to get it done, there are still majorissues hanging in the balance."

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Brenda O'Connor, spokesperson for the Washington, D.C.-basedAmerican Insurance Association, told National Underwriterthat these factors make it hard to handicap the future of Sen.Orrin Hatch's bill and the potential for a national fund.

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In the bill, as presently written, $45 billion would becontributed by defendant companies and $45 billion from theinsurers, and a couple other sources could boost the fund up to$108 billion, said Ms. O'Connor.

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"Still there are many details, such as how to determine whichinsurance company would contribute how much, that will be open tofurther discussions and revisions," she said.

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The focus now is on the Senate, since it appears that passingsuch a bill in the House would be much less challenging, accordingto Ms. O'Connor.

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"Congressman F. James Sensenbrenner Jr., R-Wis., who chairs thejudiciary committee in the House, has said that he wants to waitfor the Senate to pass the legislation and that he was committed tomaking it through the House expeditiously once it passes theSenate," she said.

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Ms. O'Connor said it's hard to say at this point whether thefund will eventually be set up. "The will is there," she said."It's definitely there on the part of Congress and certainly on thepart of insurers and defendant companies. Everyone's agreeing thatthey want to get something done. However, there are still bigissues remaining, any one of which could derail the wholeprocess."

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Asbestos is definitely viewed as "the issue" in judicialreforms, along with class action, medical malpractice, she added."I think it's an issue that we are likely to get the mostbipartisan support and the most bipartisan acceptance of a problemthat needs to be fixed on a federal level. Everybody agrees tothat," she said.

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But the difficulty, as it is in so many other legislativeprocesses, is in details, and what the fund and its payout systemwould eventually look like. "Everybody agrees that a trust fund isthe right solution, and that includes the victims and the labor.But they are not all in an agreement on what the level ofcompensation should be and what the medical criteria should be. Butthere has been some progress in that," Ms. O'Connor said.

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Mike Pickens, Arkansas insurance commissioner and president ofthe NAIC, told National Underwriter that he is not sure"what the chances are of anything getting done this year."

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But the NAIC has issued a resolution urging Congress to takeaction on this issue, he added. It is, he said, "a dark threateningcloud hanging over the insurance industry and consumers."

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