Regulators Tell Anti-Trust Commission McCarran Exemption Fosters Competition

The nation’s insurance regulators told the Antitrust Modernization Commission today that the McCarran-Ferguson antitrust exemption, combined with effective state insurance supervision, fosters a vibrant, competitive insurance marketplace, and cautioned against its repeal.

Speaking on behalf of the National Association of Insurance Commissioners (NAIC), Illinois Director of Insurance Michael McRaith said: “McCarran’s limited antitrust exemption permits supervised, cooperative activities by insurers to work in concert with comprehensive, cradle-to-grave consumer protections to promote competition, enhance consumer choice and help maintain marketplace integrity. Discussions of its repeal must be considered in the broad economic context and cannot be viewed in a legalistic vacuum.”

McRaith emphasized that the core priority of state insurance officials is to protect consumers. He also highlighted the unique characteristics of insurance, which warrant special consideration under federal antitrust laws and make analogies to other financial sector products inherently misleading. Additionally, he emphasized that state law and supervision provide active oversight of insurers’ cooperative endeavors and prohibit anti-competitive behavior.

“The third-party organizations involved with cooperative activities are licensed, structured and regulated to be consistent with state law,” McRaith said. “Price fixing, bid-rigging, tying, boycotting or any practice that undermines competition is simply not allowed and is subject to prosecution by state insurance officials and law enforcement personnel.”

McRaith also shared with the Commission the work of the NAIC’s Broker Activities Task Force, which he chairs, to address allegations of bid-rigging and other anti-competitive practices. McRaith highlighted the NAIC’s three-pronged national plan of action: to promote broker compensation transparency; to coordinate multi-state investigations of brokers’ and insurers business practices; and to ease the process of providing anonymous “tips” to alert insurance officials of unlawful or unscrupulous behavior.

“NAIC members have worked on these issues with attorneys general from around the nation, and have guided resolutions that have returned more than $1 billion to policyholders and imposed business reforms that honor consumer protections,” McRaith said. “The NAIC looks forward to continued work with federal and state officials, consumers, large and small industry participants, and other interested parties to prevent and punish anti-competitive practices.”

Source: NAIC