Insurers Committed to True Asbestos Litigation Reform; Federal Trust Plan Falls Short of Goal

While asbestos trust fund legislation (S. 852) recently introduced in the Senate contains a few improvements over previous drafts, it still falls significantly short of meeting core goals that would earn it insurance industry support, according to Craig Berrington, senior vice president and general counsel of the American Insurance Association (AIA).

Berrington’s remarks came in testimony Tuesday before the Senate Judiciary Committee; Berrington was appearing on behalf of the AIA and the Reinsurance Association of America (RAA).

“A well constructed trust fund would provide not only an efficient and exclusive remedy for victims, but equity, certainty and finality for all stakeholders,” Berrington noted. “While S. 852 as introduced does contain important improvements over prior proposals, we believe it still falls significantly short of these laudable, core goals for reform.”

Berrington noted that “a national trust fund must provide an exclusive remedy for resolution of all asbestos claims. Otherwise, there is no real certainty or finality for insurers or other funding participants. In fact, we could find ourselves paying both substantial sums into the fund and in the tort system for claims permitted to ‘leak’ outside the fund.”

The Fairness in Asbestos Injury Resolution Act of 2005 (FAIR Act), recently introduced by Judiciary Committee Chairman Arlen Specter (R-PA), has provisions that would allow asbestos claims to leak back into the tort system. Berrington raised these same types of issues when he testified before the committee on Jan. 11, 2005.

In S. 852, leakage would occur in several places – during the start-up period, while the fund is up and running, and in the event the fund sunsets, Berrington testified. “We do not think there should be any opportunity for asbestos litigation to ever return to the same state court system that is closely identified with the current crisis.”

In addition to leakage, AIA and RAA have other fundamental concerns about S. 852. For example, Berrington pointed out that language in the bill could force the relatively few U.S. insurers and reinsurers required to pay into the trust fund to assume funding obligations of nonpaying foreign insurers.

Berrington also told the panel members that AIA and RAA remain committed to staying at the table and continuing to work toward a true, much-needed resolution to our nation’s asbestos litigation crisis, saying, that “done correctly, a national trust fund for asbestos victims could provide the most comprehensive answer to our nation’s asbestos litigation nightmare.”