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last updated on March 30, 2007

LEGAL REFORM

ASBESTOS LITIGATION REFORM

THE ISSUE IS.Reform of the nation's asbestos liability system.

IT'S IMPORTANT BECAUSE. Asbestos claims have inundated the United States courts at an alarming rate. There have been over 700,000 asbestos liability claims filed in the U.S. Recent statistics show that there is an estimated 200,000 asbestos claims now pending before the federal and state courts. With tens of thousands of new claims filed each year, legal experts expect that the total number of lawsuits could eventually exceed 2½ million.

One reason for the drastic increase in asbestos lawsuits is that the scope of defendants has widened to those companies with only peripheral involvement with asbestos. Previously, asbestos cases typically targeted as defendants only those companies that manufactured asbestos-containing materials. However, following the bankruptcy of the original defendants, the current asbestos cases now target those companies that had peripheral involvement with asbestos-containing products and materials. For instance, many of the defendants named in current lawsuits are those companies that shipped and installed (and not manufactured) asbestos-related products.

Another reason for the large amount of asbestos claims is due to the increase in claims by those plaintiffs who are not truly impaired or injured. Today, courts now allow people to sue even though they exhibit no signs of physical injuries or sickness. Instead, the claimants must merely show the existence of the alleged asbestos-containing product and present medical testimony that exposure could cause injury. As much as 90% of the new claims have been brought by asymptomatic or otherwise unimpaired plaintiffs. Settlements and payments to these plaintiffs quickly deplete resources and threaten the ability to adequately compensate those who are truly sick.

Asbestos liability cases are having a serious economic effect on businesses from all industries. For example, asbestos cases have sent more than 75 American companies into bankruptcy, which has led to numerous lost jobs and employee retirement plans. Additionally, because the current lawsuits name as defendants those companies with peripheral involvement in asbestos-containing materials, thousands more companies are now facing potential economic crisis. With over 8,400 American companies named as defendants in asbestos cases, legal experts predict that asbestos liability could ultimately cost the U.S. economy well over $200 billion.

At the federal level, there have been several attempts over the last three years to address the asbestos litigation crisis. However, legislation creating a national asbestos trust fund was unacceptable and NAMIC opposed the bill.

However, state policymakers have taken action to reduce frivolous asbestos lawsuits in the states and have passed major reforms. Those states that have enacted meaningful asbestos legislation are Ohio, Texas, Florida, Georgia, South Carolina and Kansas.

NAMIC POSITION. NAMIC will continue to work with the states to enact meaningful reforms. At the federal level, NAMIC believes that Congress must craft legislation to ensure certainty and finality, affordability, and effectiveness and efficiency. There are people that have been physically injured or have died from exposure to asbestos, and the legal system should fairly and adequately compensate these innocent victims. However, today's system instead targets and punishes those companies who had only peripheral or no involvement with asbestos-containing materials, and it allows some individuals to sue and obtain compensation when they are not injured. Wrongly punishing innocent companies while awarding damages to unimpaired plaintiffs only serves to prevent the truly injured from obtaining just compensation.

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Benjamin Franklin Public Policy Award

Every two years, NAMIC presents their coveted Benjamin Franklin Public Policy Award© to lawmakers who have supported a stronger insurance market at least 75 percent of the time. This is demonstrated based on their support of NAMIC's position on certain roll call votes taken, or being a principal player/sponsor on legislation affected the property/casualty insurance industry, during the previous Congress.