Time To Fish Or Cut Bait On Asbestos Reform Bill

One issue is how much money industry players and insurers must contribute in the short term to the trust fund that would be established to pay claims.

o The second item is at what point the so-called deluge of "pending claims" that is, new claims filed in anticipation of asbestos legislation would be placed into the alternative processing program.

"To that end, I asked you to give me an indication as soon as you could of whether you thought you could move in our direction on those two issues such that further discussions would make sense," he wrote.

Sen. Frist said in his letter that "the business and insurance communities are simply not willing to fund a $140 billion trust and, simultaneously, leave open the tort system as your proposal envisions."

A lobbyist for one of the key insurance negotiators on the asbestos issue, who asked not to be named, said he interpreted the letter as indicating that Sen. Frist is ready to call a halt to the interminable negotiations because of the press of backlogged congressional business he and his Senate colleagues will confront when Congress returns for an abbreviated session on Sept. 7.

Sen. Frist "knows that there are too many open questions that remain on this issue that cannot be resolved, but doesn't want to take the responsibility or the heat for closing down the negotiations," the lobbyist said. "And [Sen.] Daschle is covering his bases in the sense that he doesn't want the business community to think he is totally opposed to class action reform."

He said that Sen. Daschle "is getting strong criticism from South Dakota businesses because it was he who thought up the parliamentary maneuvers which resulted in the death of the bill."

The lobbyist added: "They are playing volleyball with a hand grenade and hoping it blows up in the other person's hands."

Congress, the insurance industry and the so-called defendant companies have been seeking to develop an alternative program for dealing with asbestos claims for three years.

One key issue dividing defendant companies and insurers is that the insurance industry is not united as to the appropriateness of a trust fund, and many key insurance players oppose any legislation containing a trust fund as a result of that.

Other issues dividing insurers include the timing of payments into the trust fund and the so-called "assessment issue"how insurers will divide up their contributions into the fund. Current proposals for dealing with the latter issue include creation of a commission appointed by the president to make those decisions.

As for the timing of insurer/defendant company payments into the trust fund, Sens. Frist and Daschle are suggesting that $36-to-$40 billion be contributed into the fund in the first six years, while organized labor argues that at least $60 billion should be deposited during in that period.

The difference is the result of the "time value of money," the lobbyist said, "and because organized labor and the trial lawyers want the ability as soon as possible to come back and ask for more."

Currently, all contributions into the fund would be over 27.5 years. After that, all claims would revert to the tort system under the current plan. Insurers object to this, saying that their contributions to the trust fund should eliminate all liability going forward.

Reproduced from National Underwriter Edition, August 5, 2004. Copyright 2004 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.