Even Without Trust Fund, Asbestos Reform Needed

Even Without Trust Fund, Asbestos Reform Needed

When the Senate returns from its August recess next week, one of its top priorities must be to find some alternative to the dysfunctional asbestos reform bill currently pending.

The legislation approved by the Judiciary Committee, S. 1125, is worse than the status quo. Instead of a self-contained trust fund dedicated to resolving asbestos claims, the legislation establishes a system that is out-of-control.

Not only does it impose tens of billions of dollars of upfront costs on the insurance industry, the industrys potential back-end liability is unlimited.

Moreover, while one major purpose of the legislation is to get asbestos cases out of the court system, S. 1125 contains numerous loopholes that would allow claimants to file lawsuits.

Not surprisingly, five Republicans on the Senate Judiciary Committee who voted for S. 1125 have now backed away and insist that the legislation be fixed.

But it may not be possible to fix S. 1125. Too many powerful constituencies, including trial lawyers and labor groups, will oppose any changes that reduce the already excessive costs of the legislation.

If so, the industry must find an alternative vehicle, such as S. 413, legislation introduced early this year by Sen. Don Nickles, R-Okla. Rather than a complicated trust fund system, S. 413 aims at simplicity. It would establish medical criteria for asbestos claims based on guidelines developed by recognized medical authorities, such as the American Medical Association.

While this legislation may not be perfect, it would represent a significant improvement over the status quo.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 25, 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.