Trades Urge Cost Lid For Asbestos Fund Measure

By Steven Brostoff, Washington Editor

NU Online News Service, July 8, 1:28 p.m. EDT,Washington?Three leading trade associations are urging thesenators negotiating asbestos legislation details to assure thatthe cost of the legislation does not get out of hand.

In a joint letter to Senate Judiciary Committee Chairman OrrinHatch, R-Utah, the Alliance of American Insurers, the NationalAssociation of Independent Insurers and the National Association ofMutual Insurance Companies said that there must be finality andcertainty in the legislation.

The letter came after the Judiciary Committee agreed last weekto an amendment that increased funding for what was originally a$108 billion trust fund to resolve asbestos-related claims to some$153 billion.

In addition, insurance companies and asbestos defendants couldbe assessed up to $1 billion a year each if the fund runs out ofmoney before all claimants are paid.

Joe Manero, a representative of the Downers Grove, Ill.-basedAlliance of American Insurers, said that the legislation must notbecome a blank check for Alliance members. It must not become anopen-ended pot of money.

The letter the three associations sent to Sen. Hatch, Mr. Maneronoted, is conciliatory in tone and stresses their desire to workwith all members of the Committee in order to forge acompromise.

Georgiann Howell, a representative of the Indianapolis-basedNAMIC, said that the legal system should fairly compensate thosewho have been truly injured by asbestos.

But she noted that the potential industry liabilities in thelegislation are so substantial that some small mutual insurancecompanies could be put out of business.

Anne Sittmann, a representative of the Des Plaines, Ill.-basedNational Association of Independent Insurers, added that NAII isconcerned about the allocation process, involving how much eachcompany must contribute to the fund.

The allocation, she said, must equitably distribute liabilitybetween insurers and reinsurers based on exposure toasbestos-related loss in order to avoid cross-subsidization, Ms.Sittmann said.

In addition, she said, there must be a limit to the liability ofeach company.

Ms. Howell said that the recent changes to the bill definitelymake it less attractive to insurance companies. Insurers, she said,could end up opposing the bill, but they do not want that to be theend result.