Scrap McCarran, Commission Urges

Instead, he said, the law dictates that the state insurance regulators–who are charged with regulating the business of insurance under both the McCarran-Ferguson Act and the 1999-enacted Gramm-Leach-Bliley Act–”are the appropriate arbiters of what is permissible conduct in this context, and they are able to ground that determination in their overall regulatory scheme based on their unique expertise in regulating the industry.”

If the state regulatory authority is to truly be preserved as stated under Recommendation 32, Kerley said, “then the logical conclusion is that McCarran should be preserved.

“To repeal the limited exemption from federal antitrust enforcement authority it contains would undermine the state insurance regulatory system mandated by the McCarran-Ferguson Act to the near-term detriment of both that regulatory regime and the insurance policyholder consumers that regime is designed to serve,” Kerley said.

On behalf of the American Council of Life Insurers, Whit Cornman, associate director of media relations, said, “Obviously this is an extensive report covering a wide-range of anti-trust laws.

“With regard to McCarran-Ferguson, we continue to believe that a discussion of McCarran belongs as part of a broader discussion regarding insurance regulatory reform and modernization and an optional federal charter,” he added.

The commission dismissed in its report the potential effect that eliminating the exemption from collecting loss data would have on small insurers. “Like all potentially beneficial competitor collaboration generally…such data sharing would be assessed by antitrust enforcers and the courts under a rule of reason analysis that would fully consider the potential pro-competitive effects of such conduct and condemn it only if, on balance, it was anticompetitive.”

The commission added, “Insurance companies would bear no greater risk than companies in other industries engaged in data sharing and other collaborative undertakings.”

It also noted, “To the extent that insurance companies engage in anticompetitive collusion, however, then they appropriately would be subject to antitrust liability.”