11 Insurers Lobby Against Asbestos Fund

Senate Democrats and their organized labor constituents are also demanding that a trust fund be at the core of such legislation.

Liberty Mutual's Washington lobbyist Doug Bennett confirmed Friday that the Boston-based company is leading the effort involving a letter to Sens. William Frist, R-Tenn., Senate majority leader, and Arlen Specter, R-Pa., chairman of the Judiciary Committee.

The letter asks that the trust fund concept be scrapped. The fund is at the core of efforts to create an alternative claims resolution process for workers injured from exposure to asbestos in the workplace.

Congressional legislative initiatives in the asbestos area, the letter suggests, should be focused on establishing medical criteria for claims.

The letter is being circulated to members of the Property Casualty Insurers Association of America (PCI) in order to gauge support.

"Liberty believes that an unequivocal message should be sent to Chairman Specter and the Senate Leadership that the Trust Fund process has gone on long enough, given their view that no bill acceptable to the insurance industry is likely to come out of the process, and that the chances of a bad bill are real," the letter says.

It adds that the signers feel "that now is the time to turn to alternatives such as litigation-based reform including medical criteria and venue." The letter to PCI members was signed by Gregory W. Heidrich, PCI senior vice president – commercial lines and secretary.

The letter asked those members of PCI who support the letter to call Paul Mattera, senior vice president and chief public affairs officer at Liberty Mutual or make e-mail contact directly at paul.mattera@libertymutual.com.

"Paul has indicated to us that insurers who have agreed to sign the letter include Liberty Mutual, Chubb, Safeco, AIG, Zurich, Gen Re, Am Re, Swiss Re, Nationwide and Equitas, (the run-off company established by Lloyd's of London)," Mr. Heidrich said in the letter. "He also indicates that companies considering signing include: One Beacon and Hartford."

The letter was obtained Thursday by National Underwriter. At the time, Mr. Mattera denied any such plans.

A PCI staff official in Washington, D.C. denied that the letter implied that PCI supported efforts to kill asbestos legislation that has creation of a trust fund as its core.

"The letter was an e-mail sent to a group of member companies on behalf of another member company," said Scott Duncan of PCI's Washington office. "PCI gives its members every opportunity to develop consensus on issues that affect the insurance industry. In this case, PCI performed an administrative role in circulating a letter from one of its members
attempting to do just that. However, PCI has not signed the letter."

In general, while the insurance industry has joined with defendant companies in asking that the trust fund approach be abandoned in favor of a bill establishing medical criteria, the industry has not publicly sought to dissuade the Senate from working on a bill incorporating a trust fund for fear of antagonizing key members on both sides of the aisle.

A trust fund is key to Democratic support in the Senate, and insurers' representatives said the concern is that publicly abandoning it will reduce Democratic support for other industry priorities.

But the letter comes at a time when Senate Republicans are under renewed pressure from the White House to pass an asbestos litigation reform bill.

Thursday, Sen. Specter said at a Judiciary Committee meeting that he was close to getting agreement from Republican members of the committee for a bill that would include a trust fund, and asked members of the committee to give his staff a list of concerns so they could deal with them during the two-week Easter recess that began Friday.

There are reports that Sen. Specter will reduce the size of the trust fund from the agreed-upon $140 billion to $90 billion to win the support of Republicans on the committee, but Mr. Bennett of Liberty Mutual denied that.

"I don't know the status of that," he said. But, Mr. Bennett said, concessions Sen. Specter is making to Republicans are language holding attorney's fees to five per cent; tightening of medical criteria to give less compensation to smokers; and revision of language in the current bill that makes all claims revert to the tort system any time awarded claims are not paid within nine months.

The nine month provision is a key reason the insurance industry and defendants are reluctant to support the bill. Another concern is that under the current bill all claims would revert to the tort system when the legislation sunsets in 27 and a half years.

Mr. Specter also said Republicans on his committee were concerned about whether the Labor Department was best suited to administer the fund and whether the federal government might be compelled to pay into the fund if it runs out of money. "It's ironclad the federal government is not going to have to pay," he told reporters after the committee meeting.

According to Sen. Specter, President Bush named asbestos as one of three major issues he was concerned about during a recent meeting with Sen. Frist.

Sen. Specter said Sen. Frist told him that during the course of the meeting "the president spent a long time on asbestos."