At least one member of Congress is questioning the insurance industry’s exemption from federal anti-trust laws.[@@]
Sen. Peter Fitzgerald, R-Ill., the senator who convened today’s hearing on insurance brokerage compensation, says one result of the investigations should be a fresh look at the section of the McCarran-Ferguson Act that created the anti-trust exemption.
“The system of state regulation has worked well for many purposes,” Fitzgerald, chairman of the financial management subcommittee of the Senate Governmental Affairs Committee, said at the insurance brokerage hearing.
But Fitzgerald, whose subcommittee held the hearing, said that state regulators may have trouble detecting abuses of market power and that anti-trust provisions are needed most in industries with high market concentrations. He noted that the 2 largest insurance brokerages control about 70% of the market for large commercial insurance policies.
“I believe it is time to revisit the antitrust exemption of the McCarran-Ferguson Act,” Fitzgerald said.
Vigorous federal anti-trust enforcement should help discourage the kind of anti-competitive conduct that New York Attorney General Eliot Spitzer is attacking, Fitzgerald said.
Fitzgerald criticized a 1980 federal law that prohibits the Federal Trade Commission and other federal agencies from investigating the insurance industry, saying that the restrictions have blinded the government to the conditions that led to the brokerage fee scandal.
Fitzgerald did not run for re-election this fall, and he will be retiring from the Senate at the end of the current term.
Spitzer himself endorsed the idea of giving the federal government the power to investigate the industry, but he said he could not support any amendment to McCarran-Ferguson that would prevent states from undertaking their own investigations.
Albert Counselman, a representative for the Council of Insurance Agents and Brokers, Washington, told the panel that the CIAB has no objection to changing McCarran-Ferguson to make it clear that brokers are subject to federal anti-trust laws.
“We believe that brokerages are subject to anti-trust law,” Counselman said.