First, the industry says, the industry's liability must be capped at $45 billion, which will be funded by a $28 billion (net present value) payment.

Second, there must be no contingency funding beyond the base funding. If the base funding is inadequate to meet actual claims experience, the industry says, the residual claims should be resolved in a modified tort system.

Third, the industry says that the trust fund must be the exclusive remedy for all asbestos-related claims. All tort system claims must be preempted.

Claims filed while the trust fund is starting up should be handled administratively, the industry says.

In addition, the industry says, there must be statutory limitations on attorneys' fees.

Finally, the industry says, allocation of funding liability among insurance companies must equitably reflect exposure to and liability for actual asbestos-related claims based on a common methodology, common assumptions, and consistent application of the methodology and assumptions performed by independent actuaries.

Industry groups supporting the principles include the National Association of Mutual Insurance Companies, the National Association of Independent Insurers, the American Insurance Association, the Alliance of American Insurers and the Reinsurance Association of America.

Prior to the agreement on principles, there had been a split in the industry over the legislation currently pending in the Senate, S. 1125.

S. 1125, as originally drafted, would have created a $108 billion trust fund to resolve asbestos-related claims, with $45 billion coming from the insurance industry.

However, after being amended by the Senate Judiciary Committee, the cost to the industry rose to some $57 billion up front, with potentially unlimited residual liability should the fund run out of money before all claims were paid.

In addition, S. 1125 would still allow some victims to pursue their claims in court.

Most of the industry opposed S. 1125 as unaffordable and unworkable, but a small group of companies tried to find a way to salvage it by tinkering with some of the interest rate assumptions.

The agreement on the set of principles means that the industry will be able to present a united front on Capitol Hill in ongoing efforts to reform asbestos litigation.