Senate, in Response to Squeeze, OKs Self-Insurance by Businesses

WASHINGTON — Responding to a liability insurance squeeze, the Senate voted 96 to 1 Thursday for legislation permitting a wide array of businesses, governments and associations to insure themselves or band together to buy group coverage.

“This is a first step but only a first step in dealing with the liability insurance crisis that all of us are aware of,” declared Sen. Bob Kasten (R-Wis.), chief sponsor of the legislation.

The measure, which now goes to the House, would expand 1981 legislation allowing manufacturers, sellers and distributors to self-insure by forming so-called risk retention groups--or buy group coverage against product liability claims.

Would Preempt States

Under the latest bill, which would preempt state law, the same right in other kinds of commercial liability cases would be accorded to corporations, professional groups, churches, schools, universities, hospitals, governments and other organizations.

Under the measure, a self-insurance group would have to obtain a charter from only one state, or Bermuda or the Cayman Islands, to operate nationwide.

The Senate acted amid complaints from many organizations about skyrocketing insurance premiums, and in some cases an unavailability of coverage. The industry has blamed the problem on the courts while consumer groups have blamed industry pricing practices during the 1970s.