WASHINGTON, D.C., Feb. 24 - The Independent Insurance Agents & Brokers of America (IIABA) is praising much-needed legislation introduced by Sen. Don Nickles (R-Okla.) that will halt the onslaught of asbestos litigation overwhelming the courts and put truly sick people at the front of the compensation line.
IIABA CEO Robert A. Rusbuldt says the Nickles bill—the Asbestos Claims Criteria and Compensation Act (S. 413)—offers a common-sense solution to a fast-growing asbestos litigation crisis that is hurting not only the businesses being sued but also other companies, governments, communities and individuals as well as insurance companies, agents and brokers.
“With no uniform standard to identify genuinely sick claimants, the flood of claims filed by those who are not ill from asbestos exposure is wiping out the resources of otherwise financially secure companies and draining resources that should be going to those who currently are sick,” says Rusbuldt, who also notes that S. 413 contains medical criteria for claimants.
The sudden explosion in claims comes from people who have little or no impairment. Of the 600,000 claims currently pending, the majority are filed by people who are not sick. The New York Times recently reported that the latest surge in asbestos claims includes many healthy plaintiffs. In 2001, both the RAND Institute and Tillinghast-Towers estimated that at least 90 percent of claims are filed by plaintiffs who do not have asbestos-caused cancer. Amazingly, about two-thirds of compensation thus far has gone to claimants with non-malignant illnesses.
“We applaud Sen. Nickles for recognizing that unless the system is changed, resources to pay future claims to the sick may not be available,” says IIABA Sr. Vice President of Federal Government Affairs Maria Berthoud. “Our 300,000-member association is embarking on a proactive grassroots effort to ensure that Congress acts on this legislation and rectifies a crisis that ultimately hurts not only truly sick victims, but also American taxpayers.”
A recent study by NERA Economic Consulting reveals that more than 60 companies have filed for bankruptcy because of asbestos claims, putting some 60,000 employees out of work. This is primarily attributable to the troubling increase in lawsuits filed on behalf of individuals with no asbestos-exposure symptoms or illness. Additionally, more and more “third-party” companies with no involvement in asbestos mining or production are being unnecessarily sued.
Berthoud believes the Nickles bill strikes the right balance, limiting the litigation and unclogging civil court dockets while still protecting the rights of those who could develop symptoms in the future.
“The Nickles bill will end the diversion of compensation from truly sick individuals by compelling claimants to identify specific asbestos-related symptoms before their claim is litigated,” Berthoud says. “However, the legislation also protects individuals whose symptoms surface later in life by extending the statute of limitations for asbestos claims, ensuring they can file for compensation in the future.”
Meanwhile, independent agents and brokers are concerned asbestos litigation will soon impact their clients and their own businesses through diminished availability of both commercial and personal lines coverages. In response to the surge in asbestos claims, several insurance companies have significantly increased loss reserves to pay for potential future claims, and many others are examining their reserves.
“Although building up asbestos reserves is a prudent management move, it also could significantly impact insurance company operations in other markets by diverting resources,” notes Rusbuldt. “Companies could encounter reduced capacity in various markets, such as homeowners, auto insurance and commercial coverages. This could translate into fewer markets for independent agents and brokers and diminished ability to serve all the needs of their clients. Consumers also could face higher premiums for coverages.”
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.