(FORTUNE Magazine) – THE U.S. liability insurance crisis is already crimping summer fun. The Coney Island roller coaster may not roll on opening day, municipal swimming pools across the country may be without diving boards, and some beach towns on New York's Long Island are considering banning surfboarding even though no one can remember a surfer suing. In a few weeks the White House will propose legislation aimed at limiting lawyers' fees, damage awards, and even the definition of liability. Congress is already considering a bill that would make it easier for insurance buyers to get affordable liability coverage. Introduced by Senator Robert W. Kasten Jr. (R-Wisconsin), the bill would enable service companies, municipalities, trade associations, schools, hospitals, doctors, nurses, and even midwives to join together to buy insurance or to insure themselves. It would override the patchwork of state insurance laws that make such groups difficult or impossible to form. ''Without this bill,'' says Bruce J. Parker, general counsel of the National Solid Wastes Management Association, ''we would have to go hat in hand to every state regulator.'' The Kasten bill expands the Product Liability Risk Retention Act of 1981, which allowed for group product-liability coverage for manufacturers, wholesalers, and retailers. The 1981 act grew out of a similar insurance crisis in the mid-1970s. But by the time Congress passed the law, liability insurance was cheap and plentiful again. So far, only a handful of groups have formed in the U.S., including the Home Owners Warranty Corp., providing insurance to home builders to enable them to offer warranties against construction defects to buyers; and the National Association of Wholesaler- Distributors, offering insurance for its 40,000 members. Proponents of the Kasten bill say the current crisis is causing manufacturing companies to see if they can take advantage of the earlier law. Some have formed self-insurance groups offshore in places like the Cayman Islands and Bermuda. The largest, ACE (American Casualty Excess Insurance Co.), was formed late last year and includes IBM, GE, and 32 other corporate giants. The Kasten bill would let other kinds of insurance buyers in on the game. Parker of the solid waste association says his industry is ready to provide environmental liability coverage. Karen Ehrnman, government relations coordinator for the American College of Nurse-Midwives, says her group has been denied coverage by 17 insurers and will set up its own insurance company as soon as Congress gives the nod. The Kasten bill has been moving rapidly. Introduced in February, it has already cleared the Senate Commerce Committee and awaits action on the Senate floor. The House will hold hearings this month on a similar bill. But the opposition is mobilizing. ''We're opposed to this legislation in any way, shape, or form,'' says Charles H. Fritzel, assistant vice president for the National Association of Independent Insurers. ''It's a disruption of the ! marketplace.'' Insurance companies fear the competition. Insurance agents envision losing some commissions if customers start writing their own coverage. State insurance regulators see the bill intruding on their turf. At the least, insurance lobbyists will try to tack on restrictive amendments, such as a provision to limit the bill to two years. Still, the 1981 bill slipped into law without insurance industry support, and the Kasten bill could make it before year's end.