Asbestos bill still alive.

To use an old sports saying, insurers didn't lose the game, they just ran out of time when it came to getting Congress to pass an asbestos lawsuit reform bill in 2003.

While the top Republican in the U.S. Senate, Bill Frist of Tennessee, has pledged to get a bill on the Senate floor by the end of March, insurers shouldn't think the time between now and then is a time to take a break.

Negotiations that began last spring and continued into the fall resulted in the Senate being closer than ever to reforming how asbestos lawsuits are handled. Frist said there is still negotiating to be done, but at some point the talking has to end and a bill has to be presented for a full Senate vote.

"It's not just Congress that has a lot of work to do. It would be a mistake for people to think they can take a couple of months off until next spring," said Glenn Pomeroy, associate general counsel for GE Employers Reinsurance Corp. "ERC thinks it will be important we do everything we can in the intervening months so we have more definition and clarity about what we're asking Congress to pass. There should be no letting up."

Like any property/casualty insurer that wrote policies in the 1940s and 1950s, GE ERC has asbestos exposure, which Pomeroy estimates at $460 million.

The scope of the problem points to one of the reasons a bill is so important--insurers need to establish certainty and finality regarding asbestos lawsuits.

"The insurance industry is prepared and committed to honor the needs of its policyholders, but this ever-increasing spiral of litigation dragging in people who have nothing to do with manufacturing asbestos will test the solvency of some of the players. This has to be brought under control," said Pomeroy, a former North Dakota insurance commissioner.

Last spring, Sen. Orrin Hatch, R-Utah, negotiated bill language the industry supported, but when Hatch took it to the Senate Judiciary Committee, the bill that came out in July, S. 1125, changed so much, insurers wanted no part of it.

Frist continued talks with insurers after that, and came up with an industry-blessed proposal calling for a trust fund of about $115 billion, with a little more than $46 billion coming from insurers and some $57.5 billion coming from businesses. That's where negotiations left off. Senate Democrats representing the interests of labor and trial attorneys haven't embraced the proposal, but are willing to talk.

All parties on Capitol Hill agree the asbestos lawsuit system is broken and needs fixing, which Pomeroy said is "pretty remarkable." There just isn't consensus on how to do it.

Whatever bill materializes, the industry has difficult questions to answer, including how to decide who pays what. "You have the U.S. insurance and reinsurance industries and non-U.S. entities that sold policies. and you need to figure out a way to allocate [payments] so it's fair and equitable," Pomeroy said. "How do you write U.S. legislation that applies equally to U.S. and non-U.S. entities?"