Senators To Insurers: Give More For Asbestos Fund

In a letter to Senate Majority Leader Bill Frist, R-Tenn., the Democratic senators said that the funding issue, as well as other concerns, must be resolved if a meaningful solution to the asbestos litigation problem is to be found.

The issue involves S. 1125, legislation approved by the Senate Judiciary Committee that would create an asbestos resolution trust fund, financed largely by manufacturers and insurance companies, that would be used to resolve asbestos-related claims.

As initially proposed, S. 1125 would have created a $108 billion fund, with $45 billion coming from the insurance industry. However, after Judiciary Committee consideration, the size of the fund was increased to some $153 billion, plus a potentially unlimited back-end liability should the fund run out of money before all claims are paid.

Insurance and manufacturing groups oppose S. 1125 as it now stands, and recently agreed to a fund of about $114 billion, but only if there is no back-end liability and the fund is the exclusive remedy for all asbestos-related claims.

But the Democratic senators said this amount is inadequate. The Congressional Budget Office, they said, estimates that S. 1125 would require a trust fund of $136 billion.

Other scenarios, they said, envision an even larger fund.

The industry position, the senators said, removes some $35 billion of funding from S. 1125, which would have a detrimental effect on the fund's solvency.

The senators said the industry-backed funding level has been described as a "final offer," and thus not likely to be negotiated.

"Given the concerns that we have consistently raised regarding fair compensation and the overall funding, such a position would make it difficult, if not impossible, to reach agreement on this important issue," the senators said.

In addition, they said, the amounts paid to victims of asbestos exposure are inadequate in the industry proposal. While they are somewhat higher than what is currently in S. 1125, the senators said, "the dollar amounts fall short of fair compensation to those who have become sick or have died as a result of asbestos exposure."

"Time is short," the senators told Sen. Frist. "We believe that, through good faith negotiations that consider the needs of the victims and the affected industries, fair solutions can be found."