NAMIC: Antitrust Exemption Promotes Insurer Competition

In a study released last week by NAMIC, Lawrence S. Powell, Ph.D., University of Arkansas-Little Rock, found that the limited exemption from federal antitrust law provided to the insurance industry by the McCarran-Ferguson Act benefits consumers by allowing smaller insurers to compete on relatively equal footing with larger firms.

The report, "The Assault on the McCarran-Ferguson Act and the Politics of Insurance in the Post-Katrina Era," examines the factors influencing the current political climate surrounding insurance and the potential effects of legislation to repeal the Act. The report also explains how the exemption promotes competition and reduces costs to consumers in property insurance markets, and offers specific recommendations that could increase the affordability and availability of property insurance, particularly in the coastal regions.

Powell's conclusions were:

Insurance markets are competitive;
The limited antitrust exemption allowed for insurers does not harm consumers;
Repealing McCarran-Ferguson would ultimately harm consumers;
Free market reform would increase affordability and availability of insurance products.

According to Robert Detlefsen, NAMIC’s vice president of public policy, the study was undertaken in response to introduction in Congress of the Insurance Industry Competition Act, which would permit the Federal Trade Commission to enforce federal antitrust laws and regulations on the insurance industry. Powell was tapped because of his position as a university scholar with an endowed chair as the Whitbeck-Beyer professor of insurance and financial services at the University of Arkansas at Little Rock.

Direct questions to NAMIC's Vice President of Public Policy Robert Detlefsen.

Posted: Tuesday, September 25, 2007 12:00:00 AM. Modified: Tuesday, September 25, 2007 11:34:25 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.