Many insurance company trade groups have joined with the U.S. Chamber of Commerce to sign a letter asking Congress to oppose repeal of the McCarran-Ferguson Act.
“We are writing to express our strong opposition to S. 618 and H.R. 1081,” group officials write in the letter. “These recently introduced bills would repeal the state insurance regulation provisions of the McCarran-Ferguson Act that are designed to prevent federal antitrust lawsuits from undercutting state insurance and antitrust laws.”
The antitrust provisions of the bills “would create an inconsistent and unpredictable multi-layered morass of state and federal insurance rules,” industry officials write.
“Moreover, repealing McCarran-Ferguson in the name of ‘competition’ would almost certainly result in new anti-competitive regulation by the states that, ironically, will reduce competition, thus thwarting the basic purpose of the federal antitrust laws: the promotion of competition in a free market environment,” the signers write.
The letter was signed by officials of the American Council of Life Insurers, Washington, as well as by officials of the U.S. Chamber, Washington.
Other groups with officials signing the letter include the Council of Insurance Agents and Brokers, Washington; the Financial Services Roundtable, Washington; the Independent Agents & Brokers of America, Alexandria, Va.; the National Association of Mutual Insurance Companies, Indianapolis; the National Association of Professional Insurance Agents, Alexandria, Va.; the Property Casualty Insurers Association of America, Des Plaines, Ill.; and the Reinsurance Association of America, Washington.
The National Association of Financial Advisors, Falls Church, Va., and the Alliance for Advanced Life Underwriting, Falls Church, did not sign the letter because they are not chamber members, but they do support the chamber’s position, officials say.
In the past, the ACLI has suggested that it might be open to discussions of elimination of the McCarran-Ferguson antitrust provisions that also included discussions about giving insurers a choice between oversight by state or federal regulators.
The effort to repeal McCarran-Ferguson is being led by members of Congress angry with the industry’s handling of claims resulting from Hurricanes Katrina and Rita in 2005, and by Senate Judiciary Committee leaders who are upset about the industry’s roll in killing a bill that would have established an alternative claims-handling mechanism for workers exposed to asbestos in the workplace.
Sen. Harry Reid, D-Nev., Senate majority leader, is a sponsor of the Senate version of the bill.
In the letter opposing the antitrust repeal bills, the signers write that the McCarran-Ferguson Act creates a “limited exemption from federal antitrust laws to the extent that the business of insurance – not the business of insurance companies – is regulated by the states.”
McCarran-Ferguson “does not grant insurers blanket immunity from federal antitrust laws, as some have suggested, and it does not shield from those laws those who engage in boycotts, intimidation, or coercion,” the signers write. “Courts consistently have construed McCarran’s antitrust protection narrowly.”
“States regulate virtually every aspect of insurance, including licensing, market conduct, financial solvency, policy language, underwriting standards and the price that insurers can charge for their policies,” the signers write. “Thus, federal action to repeal or amend the McCarran-Ferguson Act is unnecessary to pursue any allegations of anti-competitive behavior.”