Two senior senators from coastal states will be the leadwitnesses on Wednesday, when the Senate Judiciary Committee holds ahearing on whether the antitrust exemption enjoyed by insurersthrough the McCarran-Ferguson Act is good for consumers.

The decision to hold the hearing led a number of insuranceindustry trade groups to voice concerns about Congress' course oninsurance regulation this year.

One representative for the interests of small insurers andagents cautioned that "the perfect storm is building onMcCarran-Ferguson repeal." His comments followed introduction of S.618, the Insurance Industry Competition Act, legislation that wouldrepeal the industry's exemption from antitrust laws throughMcCarran-Ferguson.

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

He said others in Congress are advocating the measure becausetrial lawyers support it, and another group is reacting to theirperception of "alleged collusion by certain large insurers in theGulf Coast."

"In the face of this [congressional] storm the insuranceindustry is in its typical position: unable to agree and organizedue to policy differences and trade association politics. Theindustry must unite, and do so quickly, to oppose this very realthreat to the market," the lobbyist advised.

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

The bipartisan bill is sponsored by Judiciary Committee ChairmanSen. Patrick Leahy, D-Vt.; Arlen Specter, R-Pa., ranking minoritymember of the committee; Harry Reid, D-Nev., Senate majorityleader; 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 sponsorof 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 ahomeowners 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 fromNew Orleans; J. Robert Hunter, insurance director of the ConsumerFederation of America; and Marc Racicot, president of the AmericanInsurance Association.

Michael McRaith, Illinois director of insurance, will alsoappear as a representative of the National Association of InsuranceCommissioners.

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

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

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

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

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

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