American senators have taken the first step towards federal reform of the US judicial system?s hearing of class action suits.

It is the first step in getting tort reform measures passed into law ? a development that insurers, including Bermuda-based firms, have been lobbying in support of for years.

In a large show of bipartisan support, the Class Action Fairness Act was voted through the Senate on Thursday in a 72 to 26 vote. Of that, 18 Democrats, one independent and 53 Republicans cast in favour of the reforms. Only 26 voted against the Act.

A similar measure is expected to receive approval in the House of Representatives this week, meaning that President George Bush could enact the legislation before the end of the month.

If enacted, the new legislation ? which was the first bill to come to the Senate floor this year, aims to shift multi-million dollar class action cases out of state courts into more moderate federal ones ? could be very good news for some Bermuda insurers who have had to boost reserves to the tune of billions as the value of class action awards in the US has escalated.

Reforms leading to lower ?frivolous? lawsuits and more moderate judgments would likely enable insurers to reduce the level of funds set aside for these kinds of cases.

The news was also welcomed by US insurance body Risk and Insurance Management Society, Inc. (RIMS). Janice Ochenkowski, vice-president for external affairs, said: ?RIMS applauds the members of the Senate for approving this critical reform, which is long overdue and vital to the continued recovery of the American economy. This legislation represents a critical step towards reforming our nation?s legal system and is a major achievement for RIMS? legislative agenda.?

RIMS represents over 8,900 risk managers who are responsible for purchasing commercial insurance for their respective companies. RIMS members are concerned about the extraordinary amount of capital that is expended each year by the business community to fight the rising cost of class action lawsuits ? money and resources that could be used for additional jobs or benefits for American workers.

The Class Action Fairness Act will help to create more consistent damage awards by directing these types of court cases to federal court, rather than forcing them to remain in the state court system, RIMS said in the statement.

Bermuda-based insurance giants ACE Limited and XL Capital have both had to shore up reserves to the tune of billions of dollars in recent years for prior business written in the US. ACE has moved to increase its reserves after mounting asbestos awards ? liabilities inherited through its 1999 acquisition of Cigna?s P&C business ? while XL has been forced to boost its reserves on the back of what CEO Brian O?Hara called ?marked expansion of liability in the US tort system?.

The price of this state of the US legal system? Numerous companies have been put out of business, and estimates have it costing the people who worked for these companies their jobs. In addition, it has been said to put a burden of more than $700 on each US citizen, each year.

Critics of the tort reform measures ? led by class-action lawyers and consumer groups ? have slammed President George Bush?s support as being no more than a way for him to give back to ?big business? for standing by him through two elections.