Document aD4DeNO7qaOYo7wO8kqmRxwEb

FILE NAME Insurance Industry INS DATE 1984 Jan 31 DOC INS064 DOCUMENT DESCRIPTION Memo RE The Underwriters - Marine Market and Non I.L.U. Companies Lloyd's Lloyd's Lloyd's Lime Street London FCAM FCAM HL Telephone 01-623 7100 INTERNATIONAL - MIEZUMA MIEZUMA TELECHAMS TELECHAMS LLONES LONDOSTOL TELEX OPT221 LLOYDS LLOYDS Underwriters Underwriters Underwriters Underwriters Underwriters Underwriters Underwriters Companies Companies Companies Companies | w 7? 4 problem + 8 oa hom problem problem over emphasie problem over over emphasise emphasise emphasise emphasise over consideration consideration consideration consideration consideration consideration particularly particularly particularly particularly particulary consideration particulary made made mademade made to problem particulary develop develop concern | discused discussed discussed discused discussed in ee tr S jeter jetter jetter concern ever encounterd encounterd Industry Industry most serious ever encountered encountered encountered encountered encountered encountered encounteredencountered by our our that that esential by for give active that that it it is is essential essential essential esential essential esential asues that adresed adresed adresed and more more active to your eforts your your a more practical practical practial the eforts eforts eforts that handling being develop the support more more assues assues suport support more assues assues assues sup ort practical to the practical practical practical are efforts the ef orts efforts way way way concern concern concern concern the the the most most serious serious serious serious serious Industry Industry Industry Industry Industry Industry cannot cannot cannot to give give active active ad res ed addressed addressed addressed andand more efforts handling that handling handling are are are handling handling the being being being being asbestos asbestos asbestos asbestos asbestos asbestos asbestos asbestos asbestos You You You You willwill will will will be aware be was from distributed distributed Report Report Report Report Report discusions Producers distributed establishment establishment of discusions discusions discusions discus ions discusions which was with with aware aware was from from from the the the Asbestos Asbestos Asbestos Asbestos Asbestos recently recently recently recently recently distributed distributed distributed distributed distributed Producers ProducersProducers Producers Producers aimed aimed aimed Asbestos Working Working W Working ork Workii ng n Workg ing distributed distributed distributed to the at the the the establishment establishment Annual Market An ual Party Party Party Party Market Market Annual Annual Annual Market that Annual that establishment establishment establishment establishment establishment establishmentestablishment the the the Claims Claims Claims Facilty reaching reaching positve conclusion conclusion Final Claims Claims Facility Facility Facilty Facility Facility discusionsFacilty upon werewere reaching reaching isue positve took place in Franciso Franciso discusions discusions discusions discus ions discusions discusions Claims upon upon 194. isue place Market 4th 5th 5th 5th repsentaives repsentaives January 19 4. which which representatives representatives which repsntaives place Subject hashas which representatives representatives represntaives representatives representatives represntaives representatives representatives which have have have have have yet yet which conclude agrementagremntagremnt principle been been concluded concluded concluded concluded concluded concluded were were reaching reaching reaching reaching reaching upon the coverage coverage coverage coverage issue January January 1994. were were were to to be be 1994. 1994. at at which which in atendance atendance atendance attendance attendance atendance atendance attendance ratified ratified ratified ratified ratified ratified ratified ratified isues agrement coverage coverage coverage coverage agreement issuesissues positive positive positive positive took took took the two two Subject Subject Subject agreement agre ment agrement agreement which whichwhich place London Subject provides provides conclusion conclusion place conclusion San San San Final Final Francisco Francisco Francisco Francisco Francisco Francisco London London London Market Market Market Market minor minor to to minor minor minor points points points points principle principle provides provides provides principle principle provides provides principle that that the the signatories signatories endorse wil coverage agremntrecomend provides the signatories principals principals princpals endorse and their princple respctive principals be embodiedAsbestosprincpals Claims prosal formal prosalpropsals Resolution Comite AprilApril termsterms but can be meantime the the signatories endorse signatories signatories signatories endorse endorse endorse principals principals the the proposals principals proposals embodied embodied embodied into Asbestos Asbestos Asbestos Asbestos Claims recom end and will will recommend recommendrecommend recommend to to their their their It is unlikely unlikely unlikely unlikely unlikely unlikely that that that that the formal formal agreement agreement Council Council agrement Council Council Council Council Resolution agreement agreement Resolution Resolution before before Resolution ResolutionResolution before before April before Committee Committee Committee to Asbestos Claims prosal Council confidentialty agremnt Resolution Resolution Comite Comite meanti lift lift the the confidentiality confidentialty confidentialty confidentiality confidentiality confidentiality confidentiality agreement agre ment agreementagreement agreement to enable respective respective respective respectiverespective has has details details can meantime meantime meantime agreed can meantime meantime meantime agreed agreed details to to _ te provade provade to confidetaliy insurance However it it te provaded provaded importan insurance Market Market industry respects industry respects respects ned ned to important important importantimportant important important that confidential confidential london respects this confidential confidential confidentialconfidential confidential the the the that the the london the the information information information information insurance london london london insurance industry Market Market information information provided provided industry However However However However is respects respects respects the the need need to keep keep keep keep in provided provided provided provided in this this letterletter letter letter in order order confidential confidential the information information information information which which in order order order order to to prevent prevent premature premature premature premature premature leakage leakage to to the the the media , could productive productive productive leakge interst interst interst provide all all media parties parties parties he counter counter - productive productive productive productive productive productive productive productive to to the the the interests interests interests interests of of parties parties parties parties at at this this this this counterstage counter ee The The The negotiations negotiations negotiations negotiations negotiations negotiations extending over month period have ee negotiations negotiaons negotiaons negotiaons extending Pon beenbeen been been complex complex coverage coveragecoverage complex , and and interpretations interpetaions interpretations interpretations interpretations interpretations interpretations interpetaions interpretations interpretations an extent handed handed handed down by influenced by Courts CourtsCourts over that that coverage interptaions interptaions time timetime salient The salient salient salient salient salient salientsalient isues involved are are 1 ) Coverage and Funding Insurance coverage for an exposure period will be oo provided for a period from the first exposure to an : asbestos product until manifestation of a disease within related to such product All insurance policies within . coverage exposure period shallshall constitute to utilised for payment of a block of liability payments ND forward a ea ea ze a nostece aay ep Pt Pr ' ed Oe Bod few me Oo ee me 2 ~ pce oct ) aio: moni .. c . egret eH ectr ' ne eh DO 9 qv em dm ae tas PT) peur eg gov rt ot Th et O& raonad 4 ta Tho ne ssarm # oa. cn ee OS gq peri w ~woama*k in +s Co en a ie ned ac as AreC) Leos yg Dp oO poet i a od Pa or sin ry Pee a ld eetra ae | vr yo nd ed w oe oyna te o Oo vom Sow a winsen OO eh oy we bee oe 8 wie gow . ooc yoy ome nt vO load + Hh I ne oder BY am im ect aed w soa oe gd Vr w . te o 3 ? up tt a z 4 ra BS ~ Orv eer ~J} to to exhaust ba]to the et to OW jayments jayments eNO to st such such such exhaust exhaust called called called exhaust exhaust > exhaust exhaust jayments jayments -issal a -issal jaymentsjayments from from nw -issal .t O tw hee 4 OO. ot aoe Coverag ee laa Coverag Coverag Coverag owas; de beSe That 9 a That weit 8 my ivr the Central ae dispute dispute @ nme aot Certain of such eh to of such to Fuch Fuch 156 156 Resoution te iY Certain unique difficulties unique : unique unique such mw ---- --, -- ---- --, ---- --, the creation creation creation creation onstances onstaces Fach -6 84 ibe Pith ibe 39 w mm in 2 FF ogurcta on oD wo wn in ag the in wan in g0, Central Wa ir +4 Central Central Central Central Central Under Under cy Under Under within within DT A Hee ba | wsO vt th feet for punitive . ok | punitve punitve Central Facility Facility Facility Facility Central Facility Facility wy eres meh DF propsed the the proposed proposed within A a the Central 192 na OO Central Central the 192 Met eh the Nebepe ef QO TMs 0 wana Do eronon wow oF on courts courts 40 fail ap a. 30 Wot The The paid paid to wou by by ary by by fan consist * m Advice ration ot ration ration ration m which he of courts only if if courts et oe ta Facility wo Facility Facility only pr Th oo incre Facility if Ww cy oD will will Producers Producers paid board Producers by board policies policies policies , the acordion : accordion accordion Dh insurance insurance insurance CAD mn resources od Ete rr Coverage Disputes Disputes Disputes Coverage Disputes actions brought actions brought EratorA relied relied shall shall TL be the the future chen acility a acility wee a difficulties -- i the artieS artieS artieS 176 dement pt ia: settlement set lement submit However damages damages tw . proposed - oo. rs mv plan plan plan F ( F F . 29a ( ~~ . 0a neg noo. ion may either the or parties other other : other other - po ea UF a Oa also also and insurance he before on et Fr he * be earlier cy pc 4 theory theory which which coverage coverage coverage coverage before resources coverage wie resources Disputes ae tf Disputes tae a trpeesm brought by Producers for tet damages dismisseC dismiseC dismisseC shall through ee through through through o be be erty vu DR wt cou Facili op Facili d erstanding erstanding erstanding erstanding ations ations process reren| tree in is 09 settlement is is mat er ws are are ny rid au oO ta poetd all claims claims claims claims Facility Facility Facility Facility plaint Facility Facility we claims nn handling handling handling handling attempt attempt of that either be booding parties booding parties and to to efforts efforts prof ot ahhh es towards o bes | mp et establish establish insurance insurance insurance st shares The Facility Facility mebership er has has permitted ope permits permits having having weno eon 1 tc a ob ow Producers and andand including including and including including Any disputes an te alternative developed ton resolved alternative alternative alternative . 4 9 --a--ccount be resolved account be resolved resolved was agreed agreed permitted permitted permitted that they resort resort if negotiations 14 if ch Daw en ee QO + wo not not possible the the courts instances instances instances instances instances waived waived ~~ oir mont < cy cry ou Dy py ip na will be will will be Meetings Meetings Meetings Dein es es a-* Of Settle Settle fails . or non resort resort resort to towards setlement setlement eke eer tn MoD c liability % liability 7 for in permit edpermitted This This we having n a ar Insurers Insurers disputes resolved alternative p 4 ou account resolved to a11 "n to negotiations - tv possible aply apply applyapply forst hee - forst Ot 5 Producer Producer Producer rake rake rors ue o Actin e in wn wey wee OD Insurers + Insurers On sae tp eo4 no within o woot Ay mar na wy cto aegypti # -- ---- -- n prior prior that in rT that in Pn qin tee negotiations er rene Tot temp trae tt ppm as possible ota possible Fe hee for eee vee we ous mora ae com shee et Doe Or get oF ara booms: Ounce a ao handled auioine been been re mre nme claims sy stir such we rescrt rescrt rescrt eoorye binding mo binding binding binding the axa. w settlement 0 setlement Nee ee O77 vw wt be settlement be be settlement settlement set lement governed governed governed governed principally governed _ principal y governed principally principaly principal y as a 4 . proposed wil will central there - we ue the clas class class the by employes employes from insurance moted moted Joared employes moted motedmotedmoted Joared Joared Joared employe s moted by Joared employes employes insurance estimated estimated - os 11 is for Joared estimated during this whic which which time insurace aditon aditon for no more claims claims one handling for handlig loaned also employes employes employes newnewnew wil evntualy become the Facility staff staf staff no more handling employe s ofof more more handling employes employes the one than claims claimsclaims the who who Facility Facility loaned year year year loaned wil eventuallyeventually . the employes estimaed the the their companies employes wil their their respctive companies companies employes companies companies companies employes employes ofof the retun butemployes some elect at elect elect loaned loaned companies companies to loaned employees employees at stay stay stay employes employes the on end as full will full - the start from from start Dusticstart , Dustic Dustic from that that this during during during during during which evntualy loaned eventualy eventualy eventually employees employes eventually is estimated estimated return return return return return year , time time year employees employees employes employes the the Facility Facility the Dustic Dustic Dustic loan Facility insurance insurance insurance loan Facility aA insurance should shouldshould oo - be be bo time in ad ition adition adition becomebecome become estimated estimated their their willwill train will also train train ful ful the the time timetime that of that most most respective respective respective respective respective respective employees employees employees of of respective may the Facilty Facility Facility Facility Facility Facility Facility Facility . 4 ) Scope Scope Scope Scope Scope of of Facility Facility Facility Facility Facility Facility Facility Facility To date date date date To cosputes cosputes agremnt agrement the bodily only only injury ben claims reachedclaims reached reached There regard to cosputes cosputes claims amount amount cosputes coverage of of coverage to to the avilabe property damage claims claims coverage comite exists avilable for which property sub sub atempting atempting agreement regarding regarding exist existence agreement agre ment extent of coverage coverage agrement property property regarding the the claims existnce existence for comite agreement property estimaed estimated proety damge damge clclaaiimmss but this Facilty Facilty Facilty extent be is coverage prior prior 1st July date 1954. estimated resolution of the 1954. resolution resolution resolution a resolution resolution that 1954. question question : fp he a resolutin proposed an an interim handling interim worked worked claims claims within Facilty whilst interim parties parties partiesagremnt property claims claims claims within within the Facilty Facilty whilst damge damge atempt to negotiate negotiate agrement agreement agreement agreement agreement agreement agrement has has only been reached reached reached on regard regard regard regard regard Handling Handling Handling 25 25 coverage coverage comite comite committee bodily bodily the exists bodily tagger tager available which injury injury tagger tagger of coverage coverage claims coverage coverage coverage There ThereThere and and the are st o_ amount amount amount amount for property property property property which as as property property damage atempting atempting attempting attempting at empting atempting damage claims claims . attempting work work work A out En regarding regarding regarding regarding property property damage damage the the the start start - up existence existence existence existence and extenetxtentextent of coverage coverage coverage coverage coverage claims claims but this this this not be posable possable possable posable possapbloessable possable date of the Facility Facility Facility Facility Facility which which which is estimated be 1st July July , If If there there there has has not beep beep beep resolution resolution of the the property property property property property damage damage damage question question question question question at at tha tha tha is out within negotiate proposed proposedproposedproposed proposed proposed that that that permit permit permit permit the handling the the a final Facility final Facility Facility resolution Facility Facility resolution resolution resolution whilst whilst interim interim interim agrement agre ment agreement agreement agrement be be handling of property propertyproperty damage damage damage whilst the the partiepsartiesparties parties at empt attempt resolution . attempt atempt 5 ) Facilty Facility Facility Facility Facility Facility Facility Facility CostsCosts Costs Costs Costs The The the Primary Insuresestablishng Exces Exces Facilty Insures wil wil the Primary operational operational comensurate comensurate with their particpate particpate particpate in Producer operationl wil wil comensurate comensurate comensurate their involemnt and Facilty and and Facilty Facilty Facilty operating operating operating operating expnse expensesexpense required pay pay its their partic e involemnt Facility aplicable insurance costs Primary operational operational costs costs Primary operational Producer Facility Facility operating insurance insurance insurance insurance of establishing establishing establishing Insurers Insurers Insurers operational operational Producer Producer Producer operating operating costs will operating operating is exhausted exhausted establishing establishing establishing establishing establishing establishing Insurers . Excess costs com ensurate commensurate will required expenses expenses expenses exhausted exhausted will the the Facility Facility Facility Facility Facility Facility be Excess InsurersInsurers Insurers Insurers Insurers participate comensurate comensurate comensurate comensurate with with required required required comensurate to to pay its expenses after afterafter after after all its of . f borne borne by by participate participate participate involvement involvement involvement involvement . of of aplicable aplicable applicable aplicable aplicable aplicable aplicable applicable 6 ) Reimbursement Reimbursement Reimbursemnt Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement Reimbursement ofof Payments PaymentsPaymenPatysments PaymentsPayments Payments Payments Under Under Under Under Under Interim Interim Interim Interim InteriImnterimInterim AgreementsAgrements Agre m nts Agreements Agreements Agreements Agreements Agrements Agrements ee . ders acordance acordance acordance acordance acordance with the propsed propsed propsed propsed agrement agrement for payments acordance acordance in acordance prior creation agremnt paymentspayments and accordance expenses expenses expenses and Facilty Facilty expense expnse incured prior prior to interim agrements agremnt Facility Facility Facility Facility , except incured except Where is required explictly explicty explictly provide provide provide provide provide otherwise otherwise the insures insurers insurers with insurers shall shall shal the proposed proposed incurred except incured otherwiseotherwise otherwise incurred incurred incurred where where where where Where Where prior interim Where prior interim interim party party party reimbursed reimbursed reimbursed reimbursed agre ment agreement reimbursed reimbursed and agrement for and realocate payments realocate realocate realocate realocate realocate payments payments payments the the creation creatiocnreation of the agrements agrements agreements agreements agre ments explicitly explicitly explicitly is required required required required reimburse reimburse reimburse reimburse reimburse reimburse reimburse , provide Where party party over over reimburse anther anther anther party party such such reimbursemnt reimbursemnt reimbursemnt reimbursemnt acruing beacruing acruing required made period period period anther anther anther period of party party three , such three three three reimbursement reimbursement reimbursement reimbursement reimbursement reimbursement may may yearsyears years with with interest interest interest interest interestinterest accruing accruing acruing over over a : Claims Claims Claims Claims insurance insurance for litgation litgation litgation expense expense in Producer Producer Producer insurance insurance insurance insurance Insure coverage coverage coverage litgation litgation litgation justify which Producer Insurer Insurer Insurer Insurer Insurer equitable consider consider consider that submited cab justify submited justify a Producer equitable equitable equitable equitable equitable equitable equitable wil wil standards the to Facilty resolution resolution resolution resolution withwith aforde standrs Similar Similar SimilarSimilar for fees fees fees fees and and expenses coverage consider coverage coverage consider lit gationthey they relief relief be be in accordance accordance accordance ac ordance accordance accordance submited treatment treatmenttreatment treatment treatment treatment treatment treatment will will wil wil bebe incured incur ed expenses incurred incurred incur ed litigation incurred incured in which submitted submittesdubmitted submitted af ordedaffordedaf orded justify justify standards standards standards aforde to claimsclaims asbestos asbestos asbestos wet Producer Producer or or an an an) case case for Facility Facility Facility be be Facility Facility for for for developed developed developed developed developed claimsclaicmlsaims byby ProducPersoducersProducers Producers Producers Producers Producers Producers Producers for reimbursement for costs of coordinating costs incurred in handling to to to cooperate cooperate cooperate cooperate Counsel and of of of defence Ne sepregate sepregate Policies and Deductaties without a Stop loss A formula has been developed which puts a where a cap on payments payments aggregate insurance policy which attached in the period prior has been trippered to knowledge of The formula the asbestos issue of involves a multiplier policy limits which decreases with the face amount of the policy Where Producers had deductibles without a stop relief has been afforded under a similar theory abere deductibles do not exceed 25.000 claam or per occurrence per Deductibles or insured retentions in excess of that amount must be between between the parties or in the event of a disnpegoutitateed negotiated tnegotihated enegotiated JS1 J esort 10 arbitration and if interation interation However all Policies written in the punitive damages are " waived will be knowledge of the asbestos issue interpreted strictly in accordance with their .erms oo Puty to Defend problems This subject resulted in one of the more hotly disputed problems in the negotiations The Producers took the position that in the 1966 policy forms the duty defend did not end to insurers took the upon exhaustion of the policy limits during the pposite position Unfortunately negotiation process two different were handed down by courts supporting the Prodduecceirssions position and indicating that due to the wording in the 1966 forms the duty to defend continued beyond the exhaustion of policy limits for all claims which triggered triggered such policies Obviously these decisions weakened Insurers bargaining position but a compromiusaes worked out which essentially provides that the duty to defend on a policy on 1966 form will expire on exhaustion of of all excess of defence on indemnity but be revived on exhaustion policies Rather than impose the burden such a policy which is revived the Primary insurers will fund a special defence policy which will pay for the cost of the revived defence in so instances Lo of Gaps in Indemnity Coverage Wooebto pon, - ' ~ Subscribing Insurers are now giving consideration to the Producers request that they cover gaps created by solvent subscribing insurers in the band of coverage provided that the subscription to the Facility by Insurers is heavy and there are few subscribers and that the Producer will pursue any subscribing Insurer who refuses to pay his share through litigation in court If such suit is successful the Producer will reimburse Insurers who have paid money on the behalf of subscribing Insurers in the event the gap in the band of coverage is created Dv an insolvent Insurer insurers strongly strongly maintain roe Gt-me listed above are the principal ssves CVA gp the proposed agreement There ace 01 er interpretation ssues involving interpretation of insurance policies which have also been resolved but they are too numerous to mention and do not substantially affect the operation of the Facility ' Working I hope that the above summary will give you a sufficiently broad indication of the suf iciently proposals to enable initial consideration of the matter As I have stated it is likely to be at least two months before the proposals have been put into a detailed form for presentation to all parties at interest However the Party considers that it is essential that the Market be made aware of these important developments and be provided with some background to the negotiations negotiations and Sikely developements in the future if endorsement is from the insurance Market forthcoming it is therefore proposed that there be a Market meeting at 10.30 a.m. on Monday 13th February 1984 at the City Conference Centre Marine Engincers Building 76 Mark Lane Due to space limitations it is requested that no more than two individuals attend Underwriting organisation and that ndance form at the entrance they each sign from the each 1 must emphasise that your attendance at the meeting is essential in order that the Asbestos Working Party and the various U.S. Counsel involved in these matters can address any concerns that exist within the Market The formal proposals will be distributed to all sections of the London Market when they are available However at that stage a speedy response will be necessary from London and it is therefore important rather than later to address questions that arise now , . - For your information you will find attached to this letter a list of the Producers who have been involved in these members insurer discussions and the Council Those individuals who form have been separately identified of the Asbestos Claims the Resolution Committee 2h cusson cucslsoosnely I has been 1 feel must record that the Working Party associated with the initial concept concept of the place Facility and various negotiations that have taken over the you past fifteen months should be aware that Now that an agreement members of the Working is developing Party are unanimous in their support to what they consider to be the only practical solution to this difficult problem Yours Yours Yours faithfully C : C C R.A.C. Jackson Chairman of the Asbestos Working Party ~ : ee: oie Brinco Cassiar Pittsburgh Corning Chens Illinois H.K. Porter Owens Corning Raymark Eagle Picher yo Resolution Committee Member Jim Restivo John Baldwin E. Judge Elderkin ae x INSURER GROUP Travelers Firerens Fund Aetoa C. & S. 1.N.A. 1.N.A. 1.N.A. Home Home Home Home Home Hartford Hartford Hartford Hartford Hartford Hartford Hartford Hartford London Continental Royal Royal Royal Chubb Resolution Resolution Committee Member Claude Glaser Dick Schmalz Jim Ayliffe AyliffeAyliffe Keith Keith RaymentRayment Rayment ae oa ad . wa : ' . Do . 4 a , - fe