Key Issues Remain Unresolved On Asbestos Proposal Washington
The insurance industry is trying to develop a consensus proposal on how the industrys share of a proposed asbestos claims trust fund will be allocated, one of several contentious issues still to be resolved, industry representatives told the National Underwriter.
Nonetheless, the representatives said they remain hopeful that asbestos legislation can be enacted this year. The hope is that the Senate Judiciary Committee will vote on, or mark up, the legislation, S. 1125, next week.
The issue of the insurance industrys currently proposed contribution of $45 billion to the asbestos trust fund is causing concern among insurers.
One source, who asked not to be identified, told National Underwriter that a current contribution formula would benefit four or five insurance companies at the expense of some 120 other companies that would contribute to the trust fund. The companies that benefit from the formula are naturally supporting it, this source said, while the rest of the industry opposes it.
This source said that the situation is not fundamentally different from the Superfund debate of the early 1990s, when an Environmental Insurance Resolution Fund was proposed to resolve disputed Superfund claims.
Whether companies supported or opposed the EIRF depended on how the contribution formula was calculated. The same thing, this source said, is now happening with asbestos.
The insurance industry is now involved in negotiations to try and develop a consensus proposal that can be presented to the Judiciary Committee before the mark up.
Monte Ward, vice president of federal affairs for the Indianapolis-based National Association of Mutual Insurance Companies, said that any trust fund must be fair and equitable to all parties. In particular, he said, if an insurance company has no asbestos exposure, it should not be required to pay into the fund.
Anne Sittmann, a representative of the Des Plaines, Ill.-based National Association of Independent Insurers, added that some have proposed a surcharge on the insurance industry that will be paid into the trust fund. That, she said, is something that NAII opposes.
Gary Karr, a representative of the Washington-based American Insurance Association, noted that S. 1125 would establish a commission to determine individual shares of insurance companies.
However, he said, he believes the Judiciary Committee will consider something the industry develops regarding allocations.
"This is still a work in progress," Mr. Karr said.
Beyond the allocation formula, Ken Schloman, Washington Counsel for the Downers Grove, Ill.-based Alliance of American Insurers, said other issues still under discussion include a back-end guarantee that the trust fund will not run out of money, the nature of the medical standards used to evaluate claims, and the value of individual claims.
Mr. Ward said that the issue of a back-end guarantee is troubling. The insurance industry, he said, needs to have some certainty of its liability. If there is no certainty as to the industrys responsibility, he said, it does not make sense to do a trust fund. It might be better to simply do a bill establishing medical criteria, he said.
Despite these problems, Mr. Karr said this is the best chance for reform in a long time.
Reproduced from National Underwriter Edition, June 16, 2003. Copyright 2003 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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