Because of a loophole in a Delaware insurance law, the state's taxpayers will pay an estimated $10 million worth of product liability claims filed by women who suffered toxic shock syndrome after using high-absorbency tampons formerly made by Playtex Inc.

"I don't believe that the Delaware legislature ever intended the taxpayers of Delaware to subsidize large corporations by paying their liability claims," Insurance Commissioner David N. Levinson, who is trying to close the loophole, said in an interview.

The problem arose in 1985 after California officials declared the once-flourishing Mission American Insurance Group insolvent. The carrier provided product-liability insurance to Playtex, which was a subsidiary of Beatrice Cos.

The Mission Insurance insolvency shifted liability for the claims of toxic-shock victims to the Delaware Insurance Guaranty Association, a state agency.

To meet its liabilities, the association levies an assessment of up to 2 percent of premiums on its members -- all of the companies licensed to write property and casualty insurance in Delaware. But the state's taxpayers will pick up the estimated $10 million tab for the Playtex toxic-shock victims, because the law gives the member companies a tax writeoff of $2 million a year for five years. Specifically, for each $1 a company is assessed, it can deduct $1 from the state taxes it pays on premiums.

The legislature's intent in creating the law, Levinson said, was "to protect the average person or small business that has claims against him or it, but whose insurer has gone broke."

Last year, the association sponsored, and Levinson supported, an unsuccessful bill to close the loophole by exempting it from backing any policyholder with a net worth exceeding $50 million. (Playtex's net worth is an estimated $750 million.)

The proposed reform bogged down in the state senate, a publication called Liability Week reported. As a result, Levinson said, the law "is an invitation for companies to go out and buy the cheapest insurance they can, on the theory that if the insurer goes broke, Delaware will pick up the bill," Levinson said. "I am not saying that any Delaware company has ever done that. But there's a big loophole in the law that needs to be changed."

Martin R. Petersen, a spokesman for Playtex said, "The issue here is not Playtex, but the relationship between Mission Insurance and the State of Delaware under the {guaranty law}. This is a matter of public policy determined by Delaware state government on which Playtex and its present and former affiliates has neither taken a position on nor commented about.

"Most, if not all, states have some form of law to provide compensation to insureds when a carrier with whom they had coverage becomes bankrupt or insolvent. Mission Insurance was financially healthy when it was selected as a carrier for Playtex by its former parent company {Beatrice}."

Toxic-shock syndrome was reported to have struck 2,962 women between the late 1970s, when it was identified, and last summer, and to have killed 127 of them by May 1986. The syndrome was linked to highly absorbent tampons in 1980. Playtex was the second-largest maker of such tampons, with about 30 percent of the market. In 1985, after a Harvard study indicated that a man-made fiber, polyacrylate rayon, might induce bacteria to manufacture more of the disease-inducing toxin, Playtex and Tambrands halted sales of tampons containing the fiber.