Insurers attack US Senate plan for $140bn fund for asbestos claims

US legislators' attempts to draw a line under crippling asbestos claims have suffered a major setback, with several large insurers attacking a proposed $140bn (£75bn) fund to pay all future claims.

US legislators' attempts to draw a line under crippling asbestos claims have suffered a major setback, with several large insurers attacking a proposed $140bn (£75bn) fund to pay all future claims.

Shares in companies which are exposed to further asbestos claims fell in the US and UK yesterday after it emerged that a group of insurers, including American International Group and Zurich Financial Services, criticised the fund in a letter on Monday to the Senate Judiciary Committee.

Arlen Specter, the chairman of the committee, has been drafting plans for the fund for two years. The aim of the Republican senator from Pennsylvania is to short-circuit further multimillion-dollar claims of illness caused by exposure to asbestos going through the courts by forcing future claimants to apply to a finite trust fund.

The proposal has already been mired in controversy, with Democrats arguing $140bn might not be enough to pay all legitimate claims. At the same time, some Republicans and several companies fear it would not bring an end to the matter, and that lawyers would still find ways to bring cases to court. The insurers wrote to Mr Specter that they "have become increasingly sceptical that a trust fund can ultimately provide the certainty and finality all parties seek".

One criticism by insurers and by some businesses is that the trust fund would probably continue to use a method for deciding claims whereby victims do not actually have to be ill. Instead, it has been enough in many court cases for them to be able to show they have been exposed to asbestos and could become ill.

Opponents are also unhappy that lawyers often lump claimants who are very ill in with far weaker cases, putting pressure on companies and their insurers to settle the whole case.

Bill Frist, the majority leader in the Senate, responded to the setback to the fund, reported in The Wall Street Journal, by saying: "I am confident we will have a bill that centres on a trust fund, on the floor of the Senate in the not too distant future."

Shares of US companies fighting asbestos suits which fell included the building materials company Owens Corning, and WR Grace and Co. In the UK, shares in Hanson, which is exposed to asbestos litigation in the US, recovered from early falls to end up 3.5p at 498p.