WASHINGTON--Two senior senators from coastal states will be the lead witnesses next Wednesday when the Senate Judiciary Committee holds a hearing on whether the antitrust exemption enjoyed by insurers through the McCarran-Ferguson Act is good for consumers.

The decision to hold the hearing led a number of insurance industry trade groups to voice concern about Congress' course on insurance regulation this year.

One representative for the interests of small insurers and agents cautioned that "the perfect storm is building on McCarran-Ferguson repeal." His comments followed introduction of S. 618, the Insurance Industry Competition Act, legislation that would repeal the industry's exemption from antitrust laws through McCarran-Ferguson.

The lobbyist, who gave his comments anonymously out of concern they might jeopardize his relations with lawmakers, said some policymakers are pushing the legislation and holding the hearing "to punish State Farm."

He said others in Congress are advocating the measure because trial lawyers support it, and another group is reacting to their perception of "alleged collusion by certain large insurers in the Gulf Coast."

"In the face of this [congressional] storm, the insurance industry is in its typical position: unable to agree and organize due to policy differences and trade association politics. The industry must unite, and do so quickly, to oppose this very real threat to the market," the lobbyist advised.

The hearing on the issue of "The McCarran-Ferguson Act and Antitrust Immunity: Good for Consumers?" was scheduled after four senior senators introduced the S. 618 legislation on Feb. 15.

The bipartisan bill is sponsored by Judiciary Committee Chairman Sen. Patrick Leahy, D-Vt.; Arlen Specter, R-Pa., ranking minority member of the committee; Harry Reid, D-Nev., Senate majority leader; and Trent Lott, R-Miss., Senate minority whip.

Among the lead witnesses testifying at the hearing will be Sen. Leahy, lead sponsor of S. 618, and Sen. Lott, an original sponsor of the bill and a harsh critic of property-casualty insurers' handling of claims resulting from Katrina.

Sen. Lott recently settled a suit against State Farm over a homeowners claim he lodged after Hurricane Katrina.

Joining Sen. Lott will be Sen. Mary Landrieu, D-La.

A second group will consist of Michael Homan, a homeowner from New Orleans; J. Robert Hunter, insurance director of the Consumer Federation of America; and Marc Racicot, president of the American Insurance Association.

Michael McRaith, Illinois director of insurance, will also appear as a representative of the National Association of Insurance Commissioners.

Dennis Kelly, a spokesman for the AIA, said the trade group and its 350 members oppose repeal of McCarran-Ferguson.

Ben McKay, senior vice president, federal government affairs, for the Property Casualty Insurers Association of America, voiced concern about the hearing.

"The fervor to repeal McCarran-Ferguson is being fueled by a few legislators' desire to punish one insurer for its perceived mishandling of Hurricane Katrina claims," he said.

He added, "What needs to be understood is that repeal would only damage the small and medium-sized companies--and the millions of consumers they represent--that play such a vital role in the personal and commercial insurance market."

Mr. McKay explained: "McCarran-Ferguson allows these companies to enter new markets and offer more policies to more people. Repeal of the law would limit these companies' ability to compete, and leave consumers with fewer choices in terms of both price and protection."

Charles Symington, senior vice president, government affairs and federal relations for the Independent Insurance Agents & Brokers of America, added, "The new version of this bill would be incredibly detrimental to consumers because it doesn't allow for the standardization of forms, leaving consumers unable to compare products."

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Senators Set To Testify On Insurance Competition Issue

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