The Senate Judiciary Committee has scheduled a March 7 hearing on whether the antitrust exemption enjoyed by insurers through the McCarran-Ferguson Act is good for consumers.
A homeowner from New Orleans and 2 senior senators from coastal states will recount their problems with the property-casualty insurance industry’s handling of Hurricane Katrina claims at the hearing.
No life insurance industry official will represent the industry at the hearing.
But a life industry official says the antitrust issue is of critical importance to the life industry.
“Insurance regulatory reform is one our top priorities,” says Whit Cornman, a spokesman for the American Council of Life Insurers, Washington. “Since this is the first hearing for the year on this topic, we’ll be very interested to see what develops.”
The ACLI believes that a discussion of McCarran-Ferguson should be part of any debate about giving insurers the option of choosing between a state or federal charter, Cornman says.
“If Congress is going to consider McCarran-Ferguson, it should do so as part of the broader discussion of an optional federal charter and insurance modernization, and not as an isolated matter,” Cornman says.
Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, is the lead sponsor of S. 618, the Insurance Industry Competition Act.
The bipartisan bill was introduced Feb. 15 by Sen. Leahy; Sen. Arlen Specter, R-Pa., the most senior Republican on the Senate Judiciary Committee; Sen. Harry Reid, D-Nev., Senate majority leader; and Sen. Trent Lott, R-Miss., Senate minority whip.
The decision to hold a hearing so soon after the introduction of the bill clearly signals that the committee wants to determine quickly whether there is enough political support for the bill to spend time on it in this Congress.
Lawmakers are holding the hearing early in the congressional year because the schedule is crowded, and whether the bill is able to get through the committee promptly may determine whether it can become law during the 2-year term of the current Congress.
The first witness to speak at the hearing will be Lott, a harsh critic of the p-c industry’s handling of claims resulting from Katrina. Lott sued his own insurer in connection with allegations that it failed to pay his claim promptly. His lawyers say the claim recently was settled.
Property-casualty insurance industry lobbyists have voiced deep concerns about the bill, especially its potential impact on small insurers and agents.
Some lobbyists say Leahy and Specter are putting pressure on insurers now because industry opposition that blocked efforts in 2006 to set up an alternative claims-processing mechanism for workers injured by exposure to asbestos in the workplace.
S. 618 would give the Department of Justice and the Federal Trade Commission the authority to apply antitrust laws to “anti-competitive behavior by insurance companies,” according to Leahy.
Another provision of concern to the life insurance industry would remove a provision of the Federal Trade Commission Act barring the agency from undertaking probes or issuing reports on insurance industry practices without direct congressional authorization.