Insurers Committed to Real Asbestos Reform

January 11, 2005

Insurers remain deeply committed to enactment of meaningful national asbestos litigation reform legislation that provides fairness and certainty to all stakeholders, said a representative of the American Insurance Association (AIA) in testimony before the Senate Judiciary Committee today. However, insurers also are wary of proposed solutions that essentially are “designed to fail.”

The hearing focused on the “Fairness in Asbestos Injury Resolution Act” (FAIR Act), the centerpiece of which is a national asbestos victim compensation fund. According to Craig Berrington, AIA’s general counsel – who testified on behalf of several insurance industry organizations – the current iteration of the FAIR Act fund raises several fundamental concerns for insurers.

Among insurers’ primary concerns is that the fund would not become a true exclusive remedy for all asbestos claims; rather, substantial leakage of claims back into the tort system could occur as the direct result of several provisions dealing with the fund’s start-up and either full or partial sunset

“The last thing that a national trust fund should do is to allow asbestos litigation to continue after the bill is signed into law, or be constructed in a way that ever allows a return to the same litigation system that has created the problem in the first place,” Berrington testified. “AIA could only support a trust fund construct if that fund became the exclusive remedy for all asbestos claims. Without including all claims, there is no finality, and the way some of the medical criteria and awards structure are constructed, insurers are concerned that a fund is ‘made to fail.'”

The current asbestos litigation system has caused chaos in the courts, massive economic dislocation to major sectors of the economy, great pressure on the insurance industry and is an extraordinarily expensive system of financial relief with a great majority of its capricious awards going to people who are not sick from asbestos.

“The United States Supreme Court has decried the asbestos litigation system, and has on several occasions called on Congress to resolve the asbestos litigation crisis,” Berrington stated. “The AIA and our members urge Congress to heed President Bush’s recent call for a nationwide solution this year that meets the three key principles he articulated: asbestos compensation funds should go to the truly sick; there should be a swift process for delivering justice to deserving victims, and there needs to be certainty in the system.”

Insurers have worked with members of Congress on both sides of the political aisle and other stakeholder groups over the past few years to create a workable solution to the asbestos litigation crisis. Berrington concluded his testimony by reiterating insurers’ desire to see well-crafted legislation enacted this year. “The AIA supports any asbestos litigation reform construct that would provide a truly effective, long-range solution,” Berrington noted. “It is imperative that Congress act now.”

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