April 24, 2005 by Canadian Underwriter
U.S. insurers groups have come out strongly opposed to a Senate bill to establish a US$140 billion fund for resolving asbestos claims.
While insurers have worked with legislators towards a resolution to the multi-billion-dollar asbestos litigation crisis, they say the bill introduced last week by Republican Senator Arlen Specter is not the solution.
Specter, who is Senate Judiciary chairman, introduced S.852 to set up a fund for paying asbestos claims, into which insurers would pay about US$46 billion. But both the Property Casualty Insurers Association of America (PCI) and the National Association of Mutual Insurance Companies (NAMIC) say the bill does not address the unlimited exposure faced by insurers as a result of asbestos lawsuits stemming from exposure decades ago.
“Federal legislation must provide an effective, efficient, and exclusive remedy for all asbestos claims, pending and future,” says Carl Parks, senior vice president of federal affairs for PCI. “S.852 does not meet these goals. Moreover, the legislation has the potential to permanently damage insurance markets and the U.S. economy.”
This is because the fund is not an exclusive remedy for asbestos claims, with some claims allowed to proceed outside the fund, and because the fund could be subject to a sunset provision at any time. Also, insurers say they will be subject to “orphan shares”, or the share of those other parties to a settlement who are unable to pay which poses a “large but unknowable financial burden” on the industry.
The bill is slated for hearings beginning April 28.