INDIANAPOLIS (April 17, 2007) — The National Association of Mutual Insurance Companies (NAMIC) today praised the National Conference of Insurance Legislators for warning Congress of the potentially devastating consequences of repealing the limited antitrust exemption enacted by the McCarran-Ferguson Act. In a letter sent to key members of the House and Senate, NCOIL cautioned that legislation to repeal the Act could lead to less affordable and available insurance for consumers.
“We commend NCOIL for taking this positive action on this issue,” said Neil Alldredge, NAMIC’s vice president for state and regulatory affairs. “Such a proactive effort is an example of reasonable thinking rather than a knee-jerk reaction by those who seek to punish the insurance industry. NCOIL correctly understands the grave, unintended consequences that would befall insurance consumers as well as the insurance industry by this misguided legislation.”
S. 618 would endanger the sharing of loss history and other information that allows smaller and more regional insurers to operate effectively against large companies, the letter says. “Absent these more moderately sized carriers, insurance markets would be less responsible to the availability and affordability needs of consumers — particularly in strained markets,” driving prices up, rather than down.
The letter also points out that if the Federal Trade Commission were to enforce antitrust requirements, as S 618 would allow, “insurance companies would fall prey to a complicated and very likely contradictory climate of abiding by both state and federal laws. Such confusion would destabilize insurance markets that rely on predictability to gauge risks and price products,” likely resulting in years of costly litigation.
In signing the letter, NCOIL president, Sen. Alan Sanborn, R-Miss., also points out that S-618 would call into question the operations of state guaranty funds and residual market mechanisms. Together with laws carefully tailored to suit specific state markets, these structures “safeguard the needs of consumers most at risk.”
The letter was sent to co-sponsors of S.618, including Sens. Harry Reid, D-Nev., Trent Lott, R-Miss., Arlen Specter, R-Pa., and Mary Landrieu, D-La. A similar letter was sent to members of the House Judiciary Committee regarding a companion bill, H.R. 1081.
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Posted: Tuesday, April 17, 2007 12:00:00 AM. Modified: Tuesday, April 17, 2007 12:22:09 PM.
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