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 fund to deal with asbestos exposure injury claims appears to be eroding, while interest by Republican senators in passing such legislation seems to be growing.[@@]

At the same time, a Utah Republican congressman said he will shortly introduce legislation in the House establishing medical criteria for processing such claims.

Rep. Chris Cannon said in a letter to colleagues seeking co-sponsors that his legislation represented a "common sense approach to asbestos reform." But an insurance lobbyist who asked not to be identified by name cautioned that there was no linkage between the letter to Sen. Arlen Specter, R-Pa., chairman of the Senate Judiciary Committee, and Rep. Cannon's bill. The industry official noted that Rep. Cannon had introduced similar legislation two years ago.

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

Meanwhile, efforts by some insurers to stop Ace Ltd. from reducing its potential asbestos and environmental liabilities by selling off certain reinsurance runoff units appears to be undiminished even though a suit seeking to do so was dismissed last month by a California court.

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

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

In their letters, the various parties argued that the transaction as proposed "would have a significantly unfair and unreasonable effect upon policyholders and reinsurance cedants and is not in the best interest of the insurance-buying public or the U.S. industry. There is no deadline for the Pennsylvania department to handle the application, according to a departmental spokesperson.

In the congressional arena, the letter to Sen. Specter says his current rendition of asbestos legislation, while an improvement over previous versions, "leaves too many issues unresolved" to justify industry support.

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

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

"I am confident we will have a bill, a bipartisan bill that centers on a trust fund, on the floor of the Senate in the not too distant future," Frist, a Tennessee Republican, told reporters in a briefing on the Senate floor, according to Reuters.

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

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Business Backs Off Congress-Backed Asbestos Fund

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