TRAVEL INSIDER : What Value Life? Issue Unsettled for Air Travel : Insurance: Pan Am verdict gives a glimmer of hope to families of international air-crash victims. But for now, your life may be worth just four tons of luggage.

Maybe the numbers caught your eye. Last month, after a New York jury found Pan American World Airways liable in the 1988 explosion of Flight 103 over Lockerbie, Scotland, attorneys said victims’ families could eventually collect as much as $300 million or more in damages from the now-defunct airline’s insurers.

For families of the 270 Lockerbie victims, the verdict can only be good news. More than three years after the deaths, this is probably the beginning of a settlement.

But the Pan Am case leaves unsettled a larger and long-disputed question that every international traveler should consider:

If you die on an international flight, what does the airline owe your family?

Millions, many litigation-minded Americans would say. And on domestic U.S. flights, there’s no legal limit to how high a liability award might go. But under most circumstances, American families can collect no more than $75,000 if a relative dies or is injured on a flight to or from this country.

Inspect your next international ticket carefully and you’ll find a notice citing that limit, and another limit: $20 per kilogram of luggage, or $9.07 per pound. Fiddle with the figures and you’ll find that, under those formulas, a human life carries the same value as 8,269 pounds of luggage.

For more than two decades, trial lawyers like San Antonio-based Charles Krause have attacked that limit as “patently unjust.”

To be sure, Krause has his own interests in the issue. His firm, Speiser, Krause, Madole & Lear, represents families of 54 passengers killed in the Lockerbie case. But even the lobbying organization that represents this nation’s largest international air carriers--those who might benefit most from the $75,000 limit--concedes that the current liability-limit system is “completely inadequate.”

Nancy Van Duyne, director of federal legislation for the Washington-based Air Transport Association, said the existing system “does not serve anyone, whether that be the families of victims, the airlines, or even the trial lawyers who represent the families.”

Yet here it is.

The roots of all this spring from the Warsaw Convention, an international treaty sealed in Poland more than 60 years ago. The idea then was to protect the then-infant airline industry from crippling liability cases. But over six decades, as airlines have grown into a massive industry, the Warsaw Convention’s provisions have largely endured. Even landmark cases like the 1983 downing of Korean Air Lines Flight 007 and the Pan Am verdict have left the treaty unchanged.

Now, after years of backstage struggle, the U.S. Senate is weighing a batch of substantial changes that could give most victims’ families a chance at quicker and greater compensation. But the outcome is still uncertain. The role of American trial lawyers is more complicated than it first seems. And the rest of the world is getting impatient with our lawmakers.

In 1929, when international government and business representatives sat down to protect the young air-travel industry, they decided that air carriers should be liable for no more than 125,000 French gold Francs per passenger death--at the time, about $6,500. In 1934, the United States joined the agreement.

Time passed. Inflation galloped. Administrations rose and fell. But the Warsaw Convention’s death-liability limit didn’t change substantially until decades later, when pressure from U.S. officials led to another gathering of airline and government representatives.

In a series of international meetings that stretched from the 1950s into the 1970s, industry and government leaders planned a new worldwide system that would be more passenger-friendly.

The changes, known as the Montreal Protocols, would create an international compensation process for crash victims that would simplify a byzantine legal process for families of U.S. citizens, speed up the compensation process (which routinely takes several years) and raise award limits for baggage and cargo. In their most recent form, the measures do away with limits on damage awards to U.S. families of air-crash victims.

But by international agreement, those new provisions couldn’t take effect until 30 nations ratified them. As an intermediate measure until that happened, carriers in 1975 agreed to new temporary figures. Those are the figures that remain today: the $75,000 injury or death-liability limit for planes entering or leaving the U.S. and the $9.07-per-pound luggage limit.

But around the world, different national authorities have chosen to update the Warsaw Convention limits in different ways, and liability limits might be higher or lower than $75,000 on flights between other countries. American families seeking damages on overseas accidents face uncertain legal prospects.

The whole system is very messy, and specialists say that if you want to provide benefits of more than $75,000 for your family, you should consider buying some form of travel insurance. (Keep in mind the odds, however: In 1989, the world’s air carriers reported .002 fatalities per million miles flown.)

The Montreal Protocols, meanwhile, remain in gestation.

By count of the Air Transport Association, 21 countries have ratified them. But the U.S.--the nation that forced the reform effort in the first place--still hasn’t embraced the new treaty and still does business under the old limits.

That’s one reason last month’s Pan Am verdict was hailed so loudly by the victims’ families and their attorneys: To set aside the $75,000 liability limit it generally takes a “willful misconduct” finding against an airline, and that’s what the New York jury found. (Authorities believe the Lockerbie explosion was caused by a terrorist bomb smuggled aboard the Frankfurt-to-New York flight.)

So how and why has it taken the U.S. so long to throw out a system that is denounced on all sides?

The Montreal Protocols have reached the Senate floor more than once, in different versions, but have never attracted the two-thirds vote they need for ratification. Blame is tossed in various directions.

Ian Herzog, a Santa Monica attorney who specializes in aviation accident litigation, blames the delays on “the absolute stranglehold the insurance industry has had on Congress.” But others close to the talks say the insurance lobby has played virtually no role in the negotiations.

Those close observers note that for years, the principal opponent of the protocols has been the Association of Trial Lawyers of America, a lobby that protects the interests of trial attorneys in U.S. courts.

The trial lawyers have said the protocols would unfairly add a few dollars of passed-along insurance costs to every traveler’s ticket, and would perpetuate an unneccesary system that hems in an American’s right to sue. They have long favored junking the Warsaw Convention instead of amending it, and would like to see the field of international flight liability as wide open as it is for American domestic flights. Other observers note another possible motivation for the trial lawyers’ position: A streamlined compensation process, even one with unlimited awards, could yield less income for attorneys.

The trial lawyers toned down their opposition this spring after U.S. Sen. George J. Mitchell (D-Maine) held a series of compromise-making sessions, and on July 2, the Montreal Protocols returned to the Senate. This time it was packaged as a treaty with companion bill S. 2945 (the Supplemental Compensation Plan Act), and introduced by Mitchell and Sen. Wendell Ford (D-Ky.). The measures were sent to the Senate Commerce Committee, where they remained as of this writing.

The protocols’ backers want action before September, when the Senate and House of Representatives close business for the year. But the trial lawyers association is only partly reconciled to the current effort, and Van Duyne, the Air Transport Association lobbyist, acknowledges that action could be delayed until 1993, maybe later.

In other words, 30-plus years after American goverment and industry vowed to clear this issue up and make life simpler for air-crash victims and their families, they still haven’t quite managed it.

“Frankly, time is running out,” said Van Duyne. “Other nations are saying, ‘If the U.S. isn’t going to step up on this, we’re going to break away and do our own thing.’ And it would be horrible to have a different set of rules in every country.”