WASHINGTON–Insurance industry opponents of a proposed national trust fund for asbestos exposure victims remained largely unconvinced today that changes made by the sponsors of the legislation would assuage their concerns.

At a hearing of the Senate Judiciary Committee, the bill's sponsors, chairman Arlen Specter, R-Pa., and Ranking Minority Member Patrick Leahy, D-Vt., spoke of the improvements in the bill, the Fairness in Asbestos Injury Resolution Act, now also known as S. 3274.

“Today, we discuss an improved bill,” said Sen. Leahy. “The chairman and I have been responsive to concerns from many interested parties, and we have refined the bill to accommodate many of these concerns.”

Among the changes to the bill is increased oversight of the medical criteria and claims through random audits of both medical and exposure evidence submitted by claimants as well as the requirement that claimants sign a detailed affidavit chronicling their exposure.

Additionally, the new version of the FAIR Act, which was introduced late last month, also incorporates an amendment originally proposed by Sen. Jon Kyl, R-Ariz., that would limit the contributions of small and midsized companies to 1.67 percent of their gross revenues, and liberalizes the process for companies to obtain a hardship adjustment to their contribution.

Sen. Specter said the new bill also would implement tighter controls on “leakage,” a major concern for insurers fearful that claims rather than being settled through the trust will be brought back into the court system in efforts to secure greater awards.

Insurers, however, remain skeptical of the bill, arguing it remains unfair and incapable of providing certainty to companies as to what their losses will be.

Liberty Mutual Group Chairman, President and Chief Executive Officer Edmund Kelly, testifying before the committee on behalf of the Property Casualty Insurers Association of America (PCI) and the Coalition for Asbestos Reform, said that, originally contemplated, the trust involved all defendants contributing based on their relative share of liability in the asbestos tort system and that no participant was to receive favorable treatment.

“The core principle of fairness was absolutely fundamental to the integrity of the trust fund because the fault-based tort system was being replaced by the no-fault trust fund,” he added. “That core principle of fairness, however, now has been violated.”

Major companies have estimated their asbestos liability at over $1 billion, but under the new FAIR Act, those companies would only be required to pay less than $400 million to the trust fund, he explained.

As an example, Mr. Kelly noted the recent asbestos liability settlements of USG and Owens Corning, for $4 billion and $5.2 billion, respectively. “Both of these settlements, which occurred in the context of a bankruptcy court, have FAIR Act 'carve outs' or exceptions which, in the event of enactment of the trust fund, extinguish billions of dollars of obligations and reduce their remaining payments to $378.5 million,” he added.

“While that is good news for these companies, it is grossly unfair to the rest of the defendants,” he said.

In a letter to Sen. Specter submitted to the committee record of the hearing, American Insurance Association President Marc Racicot also said the bill failed to live up to the insurance industry's needs.

“To provide certainty and finality, the bill must provide the exclusive remedy for resolution of asbestos-related claims,” he wrote. “Absent inclusion of all such claims in the field or a credit for claims left in the litigation system, there can be no real finality for insurers. Our industry would inevitably find itself paying both substantial sums to the fund and additional large sums in the tort system for claims permitted to 'leak' outside of the fund.”

The original goal of establishing the trust fund was to resolve the asbestos issue permanently, but Mr. Racicot said the new bill still fails to live up to that promise.

“While the new bill represents a good faith effort to address some of our concerns, it fails to provide the certainty promised insurers in early trust fund deliberations,” he wrote. “As we have stressed since last summer, until our critical issues are adequately addressed, we continue to oppose legislation.”