Two House Democrats have introduced a bill that would repeal the McCarran-Ferguson Act insurance industry antitrust exemption.
The bill, H.R. 1583, the Insurance Industry Competition Act, would give the U.S. Department of Justice and the Federal Trade Commission the authority to apply antitrust laws to anticompetitive behavior by insurance companies.
The bill would keep the McCarran-Ferguson provision that puts jurisdiction over insurance regulation in the hands of the states.
The bill was introduced by Reps. Gene Taylor, D-Miss., and Peter DeFazio D-Ore.
Taylor and DeFazio have introduced similar bills in earlier Congresses. They say the controversy over bonuses paid to American International Group Inc., New York, employees highlights the need for action on the antitrust issue.
The current insurance industry antitrust exemption gave AIG a free pass to become “too big to fail,” and “now the U.S taxpayers are on the hook to bail them out or risk even further turmoil in an already fragile economy,” Taylor and DeFazio say in a statement. “This legislation would close that exemption.”
Taylor has been criticizing the insurance industry and proposing legislation that would change the way it is regulated since Hurricane Katrina damaged his Bay St. Louis, Miss., home in 2005.
He also has filed a suit against his insurer in connection with allegations that the original settlement of his claim was inadequate. He later renegotiated the settlement.
Recently, Taylor introduced a bill that would add windstorm coverage to the National Flood Insurance Program.
Taylor says insurers believe they are above the law.
“When it comes to the federal laws, they are,” Taylor says. “After Hurricane Katrina, insurance companies took advantage of the lack of federal oversight to bill the National Flood Insurance Program for wind damage. Taxpayers also paid for FEMA trailers, home repair grants, subsidized loans, and tax deductions for property damage that insurance should have covered.”