More than a dozen insurance companies have dropped their support of the proposed $140 billion federal trust fund meant to pay claims stemming from asbestos lawsuits, telling Congress it should instead work to establish standard medical criteria for such cases.
“We respectfully suggest that efforts now be turned towards developing alternative legislation,” the group wrote in a letter to Sen. Arlen Specter, R-Pa., who is chairman of the Senate Judiciary Committee.
Those signing the letter include Boston-based Liberty Mutual Insurance, Nationwide Mutual Insurance Co., American International Group Inc., and others.
Major insurers not signing the letter included ACE Ltd., which on Feb. 3 posted lower fourth-quarter earnings as the company booked a charge of $302 million, or $1.06 a share, to strengthen its asbestos, environmental and other run-off reserves.
St. Paul Travelers Cos. also wasn’t on the letter. St. Paul Travelers announced last week details of a plan to sell its 78 percent stake in Nuveen Investments Inc., a move by the property-and-casualty insurer aimed at raising cash after a $922 million charge related to its asbestos reserves.
The letter was also sent to Senate Majority Leader Bill Frist, R-Tenn., Senate Minority Leader Harry Reid, D-Nev., and Sen. Patrick Leahy, D-Vt., the highest ranking Democrat on the Senate Judiciary Committee.
Speaking to reporters earlier Monday, Frist said he felt “pretty good” about the progress being made on asbestos trust fund negotiations.
“I would be concerned if all the insurers dropped out, but I don’t think they’ll end up doing that,” Frist said.
In the letter, the group of insurers said it continues to have concerns with the size of the proposed trust fund, what claims might remain outside the trust fund, and what happens to defendants if the trust fund runs out.
The letter follows up a similar missive sent at the end of January, but more explicitly states the group’s decision that the time to end work on the asbestos trust fund idea has come.
In February, Specter released a draft of legislation that would create a $140 billion, industry-funded trust to settle asbestos-related injury claims.
The plan, however, met resistance from all fronts.
Insurers and other defendants worried that it wouldn’t provide final settlement of claims against them. Trial attorneys, meanwhile, said the fund wouldn’t be large enough to settle all claims.
Specter warned in a March 1 opinion piece that “the Senate has reached a critical stage where decisions in the next few weeks will result in either compromise or removal of this issue from the Judiciary Committee agenda.”
Since then, he has been meeting with Republicans on his committee to shore up their support, while quietly briefing Democrats, through Leahy, on his efforts.
Specter planned a Thursday meeting of the whole Judiciary Committee to discuss the proposal further.
The insurance group said in the letter Monday that they had concluded “that efforts to re-write the trust fund bill have not moved affected parties closer to unanimity, but rather, have resulted in even deeper disagreement.”
The group said Specter should instead consider legislation setting specific medical criteria for making an asbestos-related injury claim. Specter should also consider draft legislation restricting where asbestos claims could be made — so-called venue reform, the group said.
“You will have our support in…working to achieve this viable alternative,” the group concluded.
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