Asbestos Reform Fails

To Move Past Key Hurdle

Washington

Controversial asbestos litigation reform legislation failed a procedural vote on Thursday, but Senate Majority Leader Bill Frist, R-Tenn., vowed to continue efforts to reach a consensus.

The legislation, S. 2290, failed to muster the 60 votes needed to invoke cloture, which is necessary to prevent a filibuster. The final vote was 50 in favor of cloture and 47 against.

Immediately after the vote, Sen. Frist said on the floor of the Senate that the issue is too important to the American people for it to be dropped and it will not be dropped.

He said he plans to continue discussions over the next several days or weeks to try to reach an agreement in spite of the cloture vote.

“I'm confident we can make progress and move to a final agreement,” he said.

But the legislation remains controversial, even within the insurance industry. Indeed, prior to the vote, five major companies sent a letter to Sen. Frist saying that the trust fund approach to resolving the asbestos litigation crisis is fatally flawed. The companies American International Group, American Re-Insurance Co., Chubb, General Reinsurance Corp. and Swiss Reinsurance America Corp. said that the trust fund concept contained in S. 2290 cannot be both affordable to insurers and defendants and at the same time sufficiently beneficial to victims and their representatives to warrant their support.

Three major trade associations the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America and the Reinsurance Association of America issued a separate joint statement noting that several issues need to be resolved, including the fact that defendants and victims can continue to sue insurers under it S. 2290's provisions.

S. 2290 would create a $114 billion trust fund, with $46 billion coming from insurance industry contributions, to resolve asbestos-related claims out of court. In addition to the $114 billion fund, S. 2290 calls for an additional $10 billion in contingency funding from defendants to help assure the fund does not run out of money before all claims are paid.

Reproduced from National Underwriter Edition, April 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.

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Asbestos Reform Fails To Move Past Key Hurdle

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