WASHINGTON, February 21, 2007 — A bill to amend the insurance industry's 62-year-old statutory immunity from federal antitrust law is part of a bigger fight for control of insurance regulation that will endanger the stability of the entire insurance marketplace and create the unintended consequence of a flood of new litigation, according to the National Association of Professional Insurance Agents.

The Insurance Industry Competition Act (S. 618) would amend the 1945 McCarran-Ferguson Act to permit the Federal Trade Commission (FTC) and the U.S. Department of Justice to enforce federal antitrust laws and regulations on the insurance industry. Currently under McCarran-Ferguson, the states regulate the business of insurance.

“This is the opening move in a long chess game for control of insurance regulation,” said PIA Executive Vice President & CEO Len Brevik. “The federal government has never found an industry it didn’t want to regulate. This is a back-door attempt to bring about a federal takeover of insurance regulation. They can’t pass the optional federal charter, so they move on and try to tie it to a repeal of McCarran-Ferguson.”

Brevik noted that a spokesman for the American Insurance Association is expressing support for discussing a repeal of McCarran-Ferguson, so long as it is paired with consideration of optional federal charter legislation.

PIA Senior Vice President Patricia A. Borowski noted that in addition to subjecting the insurance industry to federal antitrust laws, the Insurance Industry Competition Act would also replace McCarran-Ferguson’s specific grant of insurance oversight to the states with a “state action doctrine” that will open the door to a big increase in litigation of insurance-related matters.
 
“The antitrust exemption that is granted by McCarran-Ferguson is extremely limited,” Borowski said. “The other thing McCarran-Ferguson does is it specifically grants insurance oversight to the states. What the Insurance Industry Competition Act would do is replace this specific grant of authority to the states with the state action doctrine. The former grants the authority to the states and the latter is a mere legal premise for the states to ‘argue’ that they have authority, subject to continuing interpretation by the courts on a case-by-case basis.”

“This bill is a powerful prescription for unintended consequences,” Borowski said. “It would inadvertently turn over oversight authority matters to the courts. It does nothing to advance insurance regulatory modernization; in fact, it would bring modernization efforts to a halt by creating a legal morass that would stifle open competition by insurers, both large and small.”

Borowski added that the bill could give more insurance oversight power to state Attorneys General instead of state legislators or governors, while at the same time creating an overlapping 56th insurance jurisdiction at the federal level – an additional layer of federal oversight that would conflict with existing state oversight and the body of state insurance laws and legal precedents established over the past six decades.
 
“While the frustration experienced by Members of Congress and their constituents in the aftermath of Hurricane Katrina is understandable, and the actions of some insurers raise legitimate questions, this bill will ruin the insurance marketplace countrywide,” Borowski said. “We have a good system of insurance regulation now. This bill would replace it with no system. It would ultimately be hurtful to the very consumers it is designed to help.”

Brevik said PIA will oppose the Insurance Industry Competition Act during its upcoming PIA Federal Legislative Summit March 28-29 in Washington, D.C.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America (SM).