House Votes to Expand Rights of Groups to Pool Liability Risk

Under pressure of skyrocketing liability insurance costs, the House on Tuesday approved an expansion of the rights of business, government and professional organizations to save money by forming self-insurance and insurance-buying groups.

The bill, similar to one approved by the Senate, won approval on a voice vote. Rep. James J. Florio (D-N.J.) said such groups must “never again be left with no alternative to traditional forms of insurance.”

The measure would preempt state laws barring businesses and others from forming such so-called risk-retention groups.

Differences must now be resolved between the House bill and the version passed by the Senate, where far more sweeping legislation to overhaul the product liability insurance system is being debated.

Amends 1981 Law

The risk-retention plan amends a 1981 law that provides such groups with a green light to band together to buy product liability insurance or self-insure against product liability risks.

The new version would expand that authority to include all forms of liability insurance.

Meanwhile, the Senate unanimously defeated a move to kill the product liability overhaul package. Sen. Bob Kasten (R-Wis.) filed a motion to shut off debate after Sen. Ernest F. Hollings (D-S.C.), a leading critic, said he was prepared to “discuss this some more. . . . “

Points to Trial Lawyers

“We have a filibuster being backed by the trial lawyers,” Kasten said. But he expressed optimism about the prospects of Senate approval for the measure before the Oct. 3 target date for adjournment.

Trial lawyers oppose the legislation, which would prompt out-of-court settlements, saying skyrocketing liability insurance rates have been caused by overly aggressive policy sales in the 1970s.

The industry favors the measure, saying the problem has been caused by a glut of lawsuits and excessive awards by juries.