It seems during every congressional cycle the possibility ofa repeal of the McCarran-Ferguson Act (MFA)crops up. The most colorful attempt was 10 years ago when formerSen. Trent Lott (R.-Miss.), dubbed at the time "the angriest man tohave been empowered in the past election" by a Wall Street Journalreporter, called the National Association of Mutual Insurance Companies(NAMIC), promising to bring down the industry. His weapon ofchoice? The repeal of the MFA.

This time Congress is looking at a repeal as it relates tohealth insurance, brought on by the repeal-and-replace debate ofthe Affordable Care Act. Since the ACA was first debated andapproved, to the current debate over its repeal and replacement,the repeal of McCarran's limited antitrust exemption has beenfloated as a curative to what ails the healthcare industry, withbills introduced every two years.

Better Competition, Better Comparisons

Those of us in the industry know the truth: that the limitedantitrust exemption created by the MFA is probably the mostimportant pro-competition law existing in the insurance industry.Shared historic loss data allows smaller companies not only to survive, butalso to compete with the big boys, and common policy forms letconsumers make actual, meaningful comparisons when they're shoppingfor coverage.

The limited exemption also works to ensure consumers areprotected in the worst-case scenario, by allowing enough leeway tooperate state guaranty funds effectively and efficiently.

Under the regulatory regime that arose from the MFA, more than5,000 insurers across the country are subject to a comprehensiveand pervasive system of state-based laws, regulations and antitrustenforcement.

Thus, federal action to repeal or amend the partial exemption isunnecessary.

Current proposals being advanced in the Senate andHouse to repeal the MFA's antitrust provisions would create aninconsistent and unpredictable multi-layered morass of state andfederal insurance rules. Moreover, repealing the MFA in the name ofcompetition would almost certainly result in new regulation by thestates that, ironically, would reduce competition, thus thwartingthe basic purpose of the federal antitrust laws: the promotion ofcompetition in a free-market environment.

It would also result in increasing costs while reducing theavailability of some high-risk coverages, forcing smallproperty/casualty insurance companies out of business.

It is imperative that the property/casualty insurance industrystays vigilant to stop any "creeping" of this issue into our partof the industry. A flexible and efficient market is needed to keepthe industry healthy.

Lawmakers Lack Understanding

There is an enormous amount of confusion among lawmakers aboutwhat the antitrust exemption does and does not do, as well as theway state regulators strictly regulate market conduct. Not understanding that insurers rely on sharinghistorical loss data and common forms, many hear the words"antitrust exemption" and assume some nefarious dealings.

Whether they come from ignorance — or in the case of then-Sen.Lott, spite — NAMIC will always respond to threats to the MFA.Although the recent focus has been on health insurance, NAMIC remains strongly opposed to tamperingwith the limited antitrust exemption, and NAMIC's governmentaffairs staff has been running in high gear to educate lawmakers onthe importance of the limited exemption.

The association has submitted testimony and has met with electedofficials and their staffs to explain what the exemption actuallyis and to counter misconceptions with the facts. The truth is,there's a reason why, despite all these attempts, the limitedantitrust exemption hasn't been repealed. Having been through thisso many times, NAMIC staff — and through our Congressional ContactProgram, NAMIC members — know what we're going to hear. We've heardall the misunderstandings, the half-truths and the conspiracytheories, and we know what to explain and how to educate lawmakersand their staffers. When we can actually speak with lawmakers andexplain, they usually get it.

In fact, during a hearing on the "covered agreement" negotiated by the Obama administration and theEuropean Union, Rep. Denny Heck (D.-Wash.), based hisskepticism about the agreement (shared by NAMIC) on the MFA. Howcould some in our industry be happy to see states preempted by aninternational agreement, he asked, while still opposing atheoretical federal regulator?

As more and more lawmakers understand the reality of theMcCarran-Ferguson Act, fewer and fewer of them support repealingthe exemption. It would be nice if it stayed that way, but we haveelections, and thus new lawmakers, and one of them is bound to havethe same knee-jerk response when hearing the term "antitrustexemption" for the first time.

When it happens, NAMIC will be ready, as we have been everytime.