In particular, they say, the provision calling for additional funding to assure that the Asbestos Claims Resolution Fund does not run out of money is unfair to insurance companies.

The draft represents reservations over the legislation that, when finalized, will likely be attached to the Judiciary Committees final report on S. 1125.

The senators signing the draft include Charles Grassley, R-Iowa; Jon Kyl, R-Ariz.; Jefferson Sessions, R-Ala.; Larry Craig, R-Idaho; and John Cornyn, R-Texas.

The additional funding provision calls for insurance companies and defendants to contribute an additional $45 billion to the fund, with $22.5 billion coming from insurers, on top of the $108 billion called for in the legislation to provide the base funding.

However, the draft says, the insurance industrys $22.5 billion share of the add-on will fall to only a few dozen participant insurers, while the defendants will be able to spread their share over thousands of companies.

“While our goal is not to protect the insurers, this is not a reasonable allocation,” the draft says.

In addition, the draft says, they are concerned about collusive default judgments against insurers. These default judgments, the draft says, involve agreements between plaintiffs and defendants in which defendants agree not to contest certain claims in exchange for an agreement by plaintiffs to enforce the judgment only against insurers.

The draft calls for language preempting collection of these judgments against insurers. In addition, the draft says that language should be added to the bill prohibiting all direct action against insurers. This, the draft says, would assure that insurers enjoy the same kind of certainty that defendants and claimants receive under the bill.

The draft also calls for reconsideration of claims values, particularly in the area of mixed causation. The draft notes that under the legislation a person whose medical condition may have been caused by multiple industrial elements is entitled to $20,000 in compensation.

Thus, the draft says, even though a claimants injuries may have been caused by something other than asbestos, the claimant can obtain an award simply by showing exposure. Moreover, the draft says, smokers can obtain large awards for lung cancer that medical science conclusively links to smoking, not asbestos.

Payments under these circumstances, the draft says, could rapidly bankrupt the fund.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 4, 2003. Copyright 2003 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.