Senate Leaders Still Far From Asbestos Compromise

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By Steven Brostoff, Washington

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NU Online News Service, Sept. 4, 2003, 2:30 p.m.EDT?Asbestos litigation reform remains a top priorityissue for the insurance industry now that Congress is back from itsAugust recess, but the outlook for reaching a compromise isuncertain at best, industry representatives say.

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Indeed, several said that a bill passed by the Senate JudiciaryCommittee is now in serious trouble with a compromise well out ofreach.

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At the same time, industry representatives expect to be workingon such issues as class action litigation reform, reauthorizationof the Fair Credit Reporting Act, flood insurance, anti-spamminglegislation and insurance regulatory reform in the remaining fewmonths before the first session of the 108th Congress adjourns.

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On asbestos reform, Carl Parks, senior vice president of federalgovernment relations with the Des Plaines, Ill.-based NationalAssociation of Independent Insurers, said that the Senateleadership is trying to craft a bill that can be brought to thefloor. Many manufacturing companies with asbestos litigationproblems, he noted, face bankruptcy without a bill, which isspurring the Senate to try and develop a compromise.

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Monte Ward, vice president of federal affairs for theIndianapolis-based National Association of Mutual InsuranceCompanies, said however, that right now, the Senate leadership doesnot appear to be even close to achieving a compromise.

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NAMIC, he noted, opposes the legislation passed by the SenateJudiciary Committee, S. 1125, but would be happy if they couldnegotiate a compromise.

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The entire insurance industry opposes S. 1125 as written,arguing that it is far too expensive and does not preventplaintiffs from pursuing their claims through litigation.

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By contrast, labor unions and trial lawyers argue that S. 1125does not provide adequate benefits to some claimants.

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S. 1125 would establish a trust fund to resolve asbestos-relatedclaims, with the insurance industry responsible for some $75billion in upfront funding and possibly unlimited back-endfunding.

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Maria Berthoud, senior vice president of government affairs forthe Alexandria, Va.-based Independent Insurance Agents and Brokersof America, said S. 1125 seems to be in serious trouble. She saidshe has grave concerns over whether Congress can reach a compromisewhen there are such stark differences of opinion.

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Nonetheless, she said, the industry is still trying to work withthe Senate and will not give up.

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Turning to other issues, Mr. Parks said he hopes the Senate willaddress class action litigation reform soon. Legislation pending inboth the House and the Senate would establish federal courtjurisdiction over many major class action lawsuits.

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Mr. Parks said that the class action system is out of controland has become a drag on the economy.

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As for FCRA reauthorization, Mr. Parks said he hopes the Senatewill get to the issue this fall. In the House, a reauthorizationbill has already passed the Financial Services Committee and shouldreach the floor of the House soon.

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The insurance industry is concerned about one provision in theHouse bill that calls for a Federal Trade Commission study of theimpact of insurance industry credit scoring on the availability ofcredit.

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Mr. Parks said that it will be difficult to knock the studyprovision out of the House bill. But there is no evidence at thispoint that the Senate intends to include a similar provision in itsbill.

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The insurance industry, Mr. Parks said, will likely focus onkeeping a study provision out of the Senate bill and then workingto eliminate it or modify it substantially when a House-SenateConference Committee develops a consensus bill.

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On anti-spamming legislation, Ms. Berthoud said the industry isstarting to get geared up for this issue. The concern, she said, isthat some anti-spamming bills may be so restrictive that groupslike IIABA will be constrained from communicating with their ownmembers.

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She likened it to the controversial "do-not-fax" regulationdeveloped by the Federal Communications Commission that theindustry is working to resolve.

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Ms. Berthoud said that IIABA will be watching very carefully toassure that the same problems do not arise with anti-spamminglegislation.

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Finally, both the House and the Senate are expected to gatherfurther information on the issue of insurance regulatoryreform.

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The House Financial Services Committee is likely to conduct aroundtable discussion involving insurance company executives andstate insurance regulators for an update on state modernizationefforts, both Ms. Berthoud and Mr. Parks said.

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Kim Dorgan, senior vice president of federal affairs with theWashington-based American Council of Life Insurers, added that sheexpects the Senate Commerce Committee to hold a hearing oninsurance regulation as well, possibly during the first week ofOctober.

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The hearing, she said, would be tied to legislation introducedby Sen. Ernest F. Hollings, D-S.C., mandating federal regulationfor all companies that do business in more than one state.

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In addition, Ms. Dorgan said, the Senate Banking Committee mayconduct a briefing on the issue.

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She said that ACLI, which supports optional federal chartering,is excited about the opportunity to discuss optional federalchartering in the Senate.

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