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This article was printed from Standard Publishing Corporation
Article's URL: http://www.spcpub.com/article.cfm?id=255
By: ELA (Fri, Mar/09/2007)
Discussion in Congress of potentially repealing the insurance industry’s limited federal antitrust exemption should be of special importance to New Englanders, given the area’s reliance on both rating organizations and smaller, regional insurance companies.
The exemption allows insurers to share historical loss data. Without access to information about other companies’ losses, many smaller insurers would not have the tools necessary to price adequately. This could lead to higher prices for consumers, as insurers would nee
When talk of repealing the antitrust exemption, which was codified in 1945 through the federal McCarran-Ferguson Act, first surfaced in Congress, it was viewed as a red herring, a knee-jerk response from lawmakers looking to blame something for the turmoil that followed Hurricane Katrina. It has since sprouted into a more pressing concern, one that the National Association of Mutual Insurance Companies (NAMIC) cited as its primary federal lobbying concern.
As we see in this week’s “Salute to Independent Agents,” agents serving rural communities depend on regionally focused insurers to place business. Absent the loss data from larger companies, these insurers might have a tougher time functioning efficiently. Where does that leave agencies that cannot produce the volume required to attract larger carriers? Surely, nowhere very appealing.
It’s ironic, then, that a primary sponsor of the bipartisan Senate legislation to repeal the antitrust exemption is Vermont Sen. Patrick Leahy. If any state has produced a thriving local insurance market, it is the Green Mountain State – Vermont’s Union Mutual, Cooperative Insurance Companies and Vermont Mutual insure significant shares of the state’s auto and homeowners markets, ranking up there with Liberty Mutual and Allstate. Could these companies, which contribute to the state’s economy and employ hundreds of Vermont resident continue to compete without the antitrust exemption? The Independent Insurance Agents & Brokers Association of America says smaller and mid-size carriers would indeed have a tougher time of it.
The sponsors of the “Insurance Industry Competition Act of 2007” (S-618) are looking to supplant state insurance regulators’ judgment and abilities to watch for anti-competitive actions for their own federal oversight. And they are again using the tragic experiences of Hurricane Katrina victims to implement reforms with potentially harsh consequences at the expense of a nation of insurance consumers.
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