Ms. Henry provided her update on the issue at the industry liaison committee session during the National Association of Insurance Commissioners summer meeting.

The proposed national fund would compensate all victims who have been exposed to asbestos and are showing impairment signs, such as lung function impairments, as well as all plaintiffs who have not yet reached final settlements or final judgments.

Those who have been exposed to asbestos but do not have impairments would be put under medical monitoring, Ms. Henry explained to the committee.

She added that it is important that only those who have actual impairments be able to tap into the fund, citing a recent example from Mississippi where five plaintiffs were awarded $25 million each even though none of them showed any impairment symptoms.

Ms. Henry also said that determining which insurer or defendant company would pay how much for the national fund has proven to be a "painful process," noting that the Fairness in Asbestos Injury Resolution Act of 2003 (S. 1125), introduced by Sen. Orrin Hatch (R-Utah) late last month, does not spell out how contributions to the fund would be made.

"We need a better allocation model," she told NAIC members.

Ms. Henry also noted that this is an unusual situation in that "a lot of times you don't have this sense of urgency and this broad-based commitment to try to make this trust fund work, but there are a lot of outstanding issues still to be decided. So even though there is the momentum to get it done, there are still major issues hanging in the balance."

Brenda O'Connor, spokesperson for the Washington, D.C.-based American Insurance Association, told National Underwriter that these factors make it hard to handicap the future of Sen. Orrin Hatch's bill and the potential for a national fund.

In the bill, as presently written, $45 billion would be contributed by defendant companies and $45 billion from the insurers, and a couple other sources could boost the fund up to $108 billion, said Ms. O'Connor.

"Still there are many details, such as how to determine which insurance company would contribute how much, that will be open to further discussions and revisions," she said.

The focus now is on the Senate, since it appears that passing such a bill in the House would be much less challenging, according to Ms. O'Connor.

"Congressman F. James Sensenbrenner Jr., R-Wis., who chairs the judiciary committee in the House, has said that he wants to wait for the Senate to pass the legislation and that he was committed to making it through the House expeditiously once it passes the Senate," she said.

Ms. O'Connor said it's hard to say at this point whether the fund will eventually be set up. "The will is there," she said. "It's definitely there on the part of Congress and certainly on the part of insurers and defendant companies. Everyone's agreeing that they want to get something done. However, there are still big issues remaining, any one of which could derail the whole process."

Asbestos is definitely viewed as "the issue" in judicial reforms, along with class action, medical malpractice, she added. "I think it's an issue that we are likely to get the most bipartisan support and the most bipartisan acceptance of a problem that needs to be fixed on a federal level. Everybody agrees to that," she said.

But the difficulty, as it is in so many other legislative processes, is in details, and what the fund and its payout system would eventually look like. "Everybody agrees that a trust fund is the right solution, and that includes the victims and the labor. But they are not all in an agreement on what the level of compensation should be and what the medical criteria should be. But there has been some progress in that," Ms. O'Connor said.

Mike Pickens, Arkansas insurance commissioner and president of the NAIC, told National Underwriter that he is not sure "what the chances are of anything getting done this year."

But the NAIC has issued a resolution urging Congress to take action on this issue, he added. It is, he said, "a dark threatening cloud hanging over the insurance industry and consumers."