Statements On Introduced Bills And Joint Resolutions
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - February 15, 2007)
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Mr. REID. Mr. President, I want to express my support for the ``Insurance Industry Competition Act of 2007,' which repeals the well-known McCarran-Ferguson Act. McCarran-Ferguson gave States the authority to regulate the business of insurance and exempted insurance from the Federal antitrust laws. Unfortunately, McCarran-Ferguson came about as a result of a Senator from my State of Nevada, McCarran, and a Senator from Michigan, Ferguson. It was passed to give a few years of relief to the insurance industry. In 1944, the United States Supreme Court ruled against the industry-wide practice of cooperating to set premium prices in United States v. Southeastern Underwriters Association. Insurers argued that most companies were too small to rely solely on their own experience in setting premiums. As a result of these protests the McCarran-Ferguson Act was passed by Congress in 1945, exempting insurance-rate fixing from the Sherman Antitrust Act, and placing responsibility for industry regulation in the hands of state governments.
Now, some 60 plus years later, insurance companies are the only businesses--other than Major League Baseball--not subject to antitrust laws. Congress began investigating the effectiveness of State insurance regulation in 1958, under the oversight of Senator O'Mahoney, who had been a principal architect of the McCarran-Ferguson Act, and found State regulation lacking, incapable of dealing with interstate and international issues, and unwilling or unable to ``bring the blessings of competition' to insurance rate-making. The same thing is true today, and its time we take action to remedy this situation. The rationale for this exemption has long since passed. Insurance should be like any other business--subject to antitrust laws.
Senator Leahy's bill would accomplish this. ``The Insurance Industry Competition Act of 2007' would repeal the exemption and simply give the Department of Justice and the Federal Trade Commission the authority to apply the antitrust laws to anticompetitive behavior by insurance companies. Such oversight could ensure that the industry is not engaging in the most egregious forms of anticompetitive conduct--price fixing, agreements not to pay, and market allocations. This Act would not affect the ability of each State to regulate the business of insurance.
If insurers around the country are operating in an honest and appropriate way, they should not object to being answerable under the same Federal antitrust laws as virtually all other businesses. American consumers should be confident that the cost of their insurance reflects competitive market conditions, not collusive behavior, and they should benefit through lower prices, more choices, and better services.
Perhaps nowhere has the insurance industry and its practices come under as much scrutiny as along the Gulf Coast in the wake of Hurricanes Katrina and Rita. Just yesterday, the AP reported that ``State Farm Insurance Cos. is suspending sales of any new commercial or homeowner policies in Mississippi starting Friday.' I ask Unanimous Consent that a news article dated February 14, 2007, from the Associated Press be printed in the Record. Insurers have been too often denying claims and delaying payouts to residents of New Orleans and all along the Gulf Coast instead of honoring their contractual commitments to their customers, and thereby contributing to the rebuilding and rejuvenation of the area. We need to act now to end this practice. I thank Senators LEAHY, SPECTER, and LOTT for their work on this important legislation.
There being no objection, the article was ordered to be printed in the RECORD
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