Industry Improves Its Position With United On Asbestos Reform
The insurance industry faces a difficult road ahead in the effort to reform the asbestos litigation mess, but it strengthened its position immeasurably by agreeing to remain unified on a set of basic principles that must be in any legislation.
After weeks of intra-industry fighting over whether the current asbestos legislation, S. 1125, could be fixed, the industry at last coalesced around a common position that is both fair and reasonable.
The industry is prepared to provide an adequate amount of funding to an asbestos claims resolution facility provided that it puts an end, once and for all, to the relentless litigation that has bankrupted dozens of companies, wasted untold billions in transaction costs, and still has failed to compensate some severely ill claimants.
Internally, the industry is insisting that the insurance industrys share of the funding be allocated among individual companies in an actuarially sound way that reflects each companys actual exposure to asbestos claims.
This will assure that companies with large asbestos exposure will not be able to shift their costs to insurers that never wrote asbestos-related business and never collected any premiums. That is how it should be.
Politically, development of the all-industry position is vital because nothing weakens an industrys negotiating position on Capitol Hill as much as disunity.
Divided industries become easy prey for politicians and other interest groups that are trying to solve their own problems by foisting them on someone else.
Speaking with one voice will assure that the industrys message on the basic elements that must be in any legislation will come through loud and clear.
Still, the next few weeks could be difficult for the insurance industry as the Senate leaders try to reach a consensus on asbestos reform.
For some problems, there are no easy solutions, and that is the case with asbestos.
What is the right amount of compensation for someone dying of mesothelioma? No one really knows.
Any scheduled amount of compensation contained in legislation will be subject to attack as "not enough."
In the ongoing debate over asbestos reform, the insurance industry will always be at a public relations disadvantage; a multibillion-dollar industry trying to limit compensation paid to severely ill victims.
Understandably, the images of severely ill claimants seeking what the critics insist is "adequate" compensation will draw much more public sympathy than the insurance industrys position focusing on economic realities and finite resources.
But the fact remains that economic realities exist and resources are finite. The industrys responsibility is to protect its own solvency, so that it can continue to pay claims not only of asbestos victims, but of all insureds who suffer a loss.
Remaining unified on the basic principles in the all-industry position will help the industry make its case both on Capitol Hill and in the public arena.
Insurance companies deserve credit for putting aside their individual differences and seeking legislation that neither bankrupts the industry nor unfairly shifts costs.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 24, 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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