The U.S. House of Representatives is considering a bill that would remove the federal antitrust exemption from the insurance industry.
In repealing the exemption, the Insurance Industry Competition Act would give the Department of Justice and the Federal Trade Commission (FTC) the authority to apply antitrust laws to anticompetitive behavior by insurance companies but would not affect the ability of each state to regulate the business of insurance. Insurers have been exempt from anti-trust laws since the passing of the McCarran-Ferguson Act in 1945.
The bill’s sponsors Gene Taylor, D-Miss., and Peter DeFazio, D-Ore. say insurers’ exemption from anti-trust laws is what allowed American International Group (AIG) to become “too big to fail” and that insurers believe they’re “above the law.”
“The fact that the insurance industry is exempt from federal anti-trust laws is outrageous,” DeFazio said. “Shouldn’t the $170 billion bailout of AIG be the third and final strike to the ‘business as usual’ attitude toward the insurance industry?”
David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), said the group opposes the Insurance Industry Competition Act, which PCI believes takes advantage of the AIG controversy to punish the entire insurance industry.
“The McCarran-Ferguson Act does not hinder competition among insurers,” Sampson said. “In fact, it promotes competition in the marketplace by putting small and medium-sized companies on a level playing field with much larger competitors, and it creates efficiencies for insurers that mean savings and choice for insurance buyers. These savings are crucial to consumers during an economic downturn, and we call upon Congress to reject this misguided legislation.”
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