WASHINGTON (March 26, 2007) — Members of leading insurance and business industry trade associations have joined forces to oppose legislation that would repeal a long-standing federal law that fosters competition in the insurance marketplace. In a letter delivered to members of the House and Senate, the signers warned of serious repercussions for consumers, as well as the insurance marketplace, if the McCarran-Ferguson Act is repealed.
“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; it 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 letter states.
The McCarran-Ferguson Act was approved by Congress in 1945 and gives states the authority and responsibility to regulate the business of insurance. Proposals in the House and Senate, S. 618 and H.R. 1081, would “create an inconsistent and unpredictable multi-layered morass of state and federal insurance rules,” the letter says.
The letter further says that enactment of S. 618 and H.R. 1081 would produce outcomes contrary to the bills’ ostensible purpose of increasing competition in insurance markets. “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 offer to work with lawmakers. “We, therefore, urge you to oppose the current bills that would repeal the antitrust provisions of the McCarran-Ferguson Act, and work with various stakeholders – including insurers, regulators, policyholders and state legislators – to enhance stable, competitive insurance markets.”
The letter is signed by the following 10 organizations, representing primary insurers, agents, brokers, reinsurers and the larger business community:
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