WASHINGTON, April 11, 2007 (PRIME NEWSWIRE) -- Will Congress strip the insurance industry of its longtime shield against federal antitrust laws? According to Sam Friedman, Editor-In-Chief of National Underwriter, that's the burning issue facing Congress these days following complaints by disgruntled policyholders and lawmakers in the wake of disputes over alleged mishandling of Hurricane Katrina claims.
Friedman added that momentum is building in Congress to punish the industry for failing to satisfy all policyholders who lost their homes in Hurricane Katrina -- including Sen. Trent Lott, R-Miss., the minority whip -- by repealing the McCarran-Ferguson Act of 1945, which gives insurers limited immunity from federal antitrust laws to conduct certain joint actions, and grants the states authority to regulate carriers.
A long-time industry observer, Friedman believes the industry is in for a big fight, with the deck stacked against insurers.
"The industry took some devastating blows during a recent Congressional hearing regarding insurer handling of Hurricane Katrina claims," said Friedman, a 25-year veteran insurance journalist, writing in his blog A View From the Press Box (www.property-casualty.com). "I was on Capitol Hill to witness the public flogging first hand, watching lawmakers -- some overtly hostile, others merely ignorant -- take turns beating insurers like a pinata."
However, Friedman points out, while possibly satisfying industry critics in the short-term, a Congressional mandate to end the McCarran-Ferguson Act could have some unintended consequences over the long haul:
-- "Just how involved would the Federal Trade Commission and Justice
Department be in overseeing the industry's day-to-day operations?
And how could state regulators function with two federal agencies
looking over their shoulders, authorized to second-guess and
overrule their decisions, or take matters out of their hands
entirely?"
-- "Wouldn't Congress eventually have to create a federal regulatory
bureaucracy to provide a standard operating procedure for insurance
oversight?"
-- "Where do we go from here? How would stripping away the antitrust
exemption impact the industry? Could all insurers adapt, or would
some go under? Would policyholders benefit in any way?"
Friedman characterized S.618 -- the Insurance Industry Competition Act -- as "pure petulance on the part of members of Congress all too eager to beat up an easy target. Some insurers have not done themselves proud with their handling of Katrina claims, that's for sure. But to turn the entire industry upside down and throw away a proven method of doing business that clearly benefits buyers would be a pyrrhic victory."
Friedman is available for further comment on this or any other subject impacting commercial, homeowner or auto insurers, including efforts to stop the industry from using credit scores in pricing policies, the need for a government backstop to insure terrorism risks, and various proposals to handle looming natural catastrophe exposures. He may be reached at 201-526-1237, or via e-mail at sfriedman@nuco.com.
For NU's news coverage of the insurance industry, go to www.propertyandcasualtyinsurancenews.com. Friedman does a weekly column in the magazine, as well as updating his provocative blog four times per week at www.property-casualty.com.
National Underwriter is a publication of Summit Business Media, LCC.
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