Consolidation rules in some states that allow hundreds, even thousands of plaintiffs to join in the same case.

Discovery limitations in some cases that are fundamentally unfair from the defense point of view.

Mr. Allen, a partner with White & Williams in Philadelphia, also addressed the documentation requirements announced last June by Equitas, set up to reinsure and run off pre-1993 non-life liabilities of Lloyds underwriters.

Equitas and several London reinsurers now require asbestos claimants to provide medical evidence of an asbestos-related injury and proof that a specific manufacturer or distributor of the asbestos was responsible for the injury.

To the extent that these requirements have served as a wake-up call to insurance companies, they have been good, Mr. Allen said. He added that the requirements are very sensible even though some, including medical experts, would disagree with their details.

But he also believes that in many respects the requirements are out of touch with the realities facing U.S. claimants and insurers each day. Nor do they necessarily accord with insurance and reinsurance contracts, he stated.

For instance, when an insurer has exercised its judgment and contributed to a settlement to protect its policyholder from liability, the reinsurance contract limits the ability of the reinsurer to apply standards to which the policyholder was not exposed, Mr. Allen said. Under the terms of most reinsurance contracts, the reinsurer must follow the insurance companys liabilities and settlements. As a result, he said, the Equitas requirements “have the potential of becoming yet another transactional expense.”

Scott Moser, director of claims for Equitas, insisted that the document requirements “are not another ploy” to avoid paying valid claims. Instead, he said, the requirements are the fundamentals of any tort claim, as well as a return to the basic practice of insurers paying valid claims and resisting invalid claims. In Mr. Mosers view, the fact that anyone would seriously question the documentation requirements is “a measure of how far off the path asbestos litigation has gone.”

He stressed that the Lloyd's syndicates, “including the Equitas years,” have paid $5 billion in the last five years, “more than any entity on Earth.” He also noted that the requirements are prospective only, and that they do not prescribe rules for all cases because they have an “exquisite” exclusion provision.

(“Asbestos claims continue to be the greatest single threat to the stability of Equitas,” said Equitas Chairman Hugh Stevenson, in announcing the reinsurer's annual results. See page 20.)

In the year since the Equitas requirements were announced, “various people have taken shots at them,” Mr. Moser said. But he added that no one has been able to cite a decision from the highest court of any state that is inconsistent with the requirements.

He warned that claimants will appear perpetually if insurers keep paying even small amounts to people who are not hurt. “This has become an entrepreneurial enterprise,” Mr. Moser said.

As part of this “stand up and fight” strategy, Mr. Moser also said that when defendants and their insurers litigate asbestos cases, they must be committed to taking the cases all the way on appeal. A settlement hurts all insurers and defendant companies, he said, because it sets the stage for the payment of even more asbestos claims.

Linda Martin Barber, director of Peterson Consulting and moderator of the briefing, questioned the practicality of Mr. Mosers suggestion that defendants litigate rather than settle asbestos cases. For instance, a company that has been sued by multiple asbestos claimants might feel the pressure to settle as a means of stopping its stock price from sliding, she noted.

Debra Hall, general counsel for the Reinsurance Association of America in Washington, D.C., stressed that asbestos claims are not just a U.S. issue anymore.

New studies suggested that past exposures to asbestos will result in 250,000 deaths in Western Europe over the next 35 years. Other studies predict that asbestos deaths in the United Kingdom might increase from 3,000 annually in 1998 to 10,000 annually in 2020, the RAA reported.

Further, Ms. Hall indicated that foreign courts are increasingly providing relief to asbestos claimants. As an example, she noted that after the highest court in the United Kingdom allowed thousands of South African asbestos claimants to sue a British mining company, the matter resulted in a settlement. She further stated that some foreign countries have banned the use of asbestos, but only prospectively, while other countries have not banned the substance at all.

Ms. Hall stated that the RAA does not take an official position on the Equitas documentation requirements. However, RAA's members have indicated that the requirements–which reflect frustration with the U.S. court system and the failure of Congress to act–”squeeze the wrong people in the middle,” namely, U.S. insurers and reinsurers, she added.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 1, 2002. Copyright 2002 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.