WASHINGTON–Sen. Trent Lott, R-Miss., suggested at a committeehearing today that legislation he supports to repeal the anti-trustexemption for insurers could be modified to exempt smallcarriers.

The lawmaker, speaking at a session of the Senate CommerceCommittee, said his bill to end insurers' limited anti-trustexemption under the McCarran-Ferguson Act could provide a “safeharbor” from anti-trust laws for small insurers with $2 billion orless of insurance in place.

Repeal of the insurance industry's antitrust exemption underMcCarran-Ferguson is among several bills Sen. Lott has proposed to“fix some of the problems” he finds with the insurance industry asa result of its handling of claims resulting from HurricanesKatrina and Rita in 2005.

Another bill he talked about at the hearing is S. 545,legislation which would require VIN-based disclosure for alltotaled vehicles by the industry through a database the industrywould be forced to maintain.

Discussing the antitrust legislation, the senator accused largeinsurers of “hiding behind” small insurers in seeking to retaintheir current anti-trust exemption.

In Mr. Lott's view, the “big insurers” are claiming that repealof McCarran-Ferguson would inordinately affect smaller insurers whoneed to have access to pooled claims and other data.

In his comments, Sen. Lott termed the insurance industry'sconduct in handling hurricane claims “outrageous, arrogant andmean-spirited.” He is currently suing State Farm in a dispute overa claim he submitted for destruction of his Pascagoula, Miss., homeby Katrina.

He said that Mississippi State Attorney General Jim Hood had “alot of evidence of misconduct and fraud” by State Farm inconsidering criminal charges against the company, but decidedinstead on a more “practical solution.”

In his own testimony before the committee, Attorney General Hoodsaid he reached a class settlement for homeowners with State Farmafter curtailing a grand jury probe of the insurer because thecompany told him it would pull completely out of Mississippi if itwas indicted.

Because the firm is by far Mississippi's largest insurer, thestate would be hurt because it would have been difficult to findalternative insurance capacity, he said.

Both Sen. Lott and Mr. Hood cited recent revelations by a NorthCarolina firm that State Farm had threatened to fire an engineeringconcern it hired to inspect storm-damaged homes in Mississippi andLouisiana.

The Associated Press reported today it had evidence thatmanagement of the engineering firm “suggested in e-mails that theinsurer was dissatisfied with how it was reporting damage.”

Only a few members of the committee attended the hearing,chaired by Sen. Mark Pryor, D-Ark., who noted in his openingremarks that no insurer or insurance company trade group choose totestify. They were unwilling to sit still for a grilling by Sen.Lott, Sen. Pryor suggested.

A senior insurance trade group lobbyist said that was not thecase. The lobbyist, who asked not to be named out of concern forretaliation, noted that a number of insurance trade groupstestified at a companion hearing on the anti-trust issue being heldat the same time by the Senate Banking Committee.

“Historically, the Senate Banking Committee has claimed primacyover insurance issues,” the lobbyist said, “and participating in ahearing being held at the same time by another committee would, theindustry felt, be considered 'insulting' by Sen. Chris Dodd,D-Conn., the chairman, and Sen. Richard Shelby, R-Ala., the rankingminority member.”

Sen. Lott's call for repeal of McCarran-Ferguson, which wasurged by Attorney General Hood and Robert Hunter, director ofinsurance for the Consumer Federation of America, was not echoed byother members of the Commerce Committee.

During the hearing, Sen. Pryor asked David Regan, vice presidentfor legislative affairs for the National Association of AutomobileDealers, if a simpler solution might be available for revealing todealers and consumers that a vehicle had been totaled.

Sen. Pryor, a former state attorney general, suggested thatputting a sticker on a junked vehicle when it is resold throughauction might do.

But Mr. Regan said that suggestion had been rejected severaltimes by the Federal Trade Commission, among others, duringdeliberations on the issue of an appropriate consumerprotection.

In his testimony, Attorney General Hood called for repeal ofMcCarran-Ferguson, along with a federal mandate that insurersprovide all perils home coverages in all states and bar use of“anti-concurrent causation clauses” that exclude windstorm claimsif flooding is involved.

Julia Benafield Bowman, Arkansas insurance commissioner,testified on behalf of the National Association of InsuranceCommissioners at the hearing.

She supported retention of McCarran-Ferguson provisions thatleave regulation of insurers to the states and noted that heroffice fields 40,000 calls annually from consumers. Consumerprotection is best left to the states, she said.

Moreover, the federal government already has an appropriate rolein regulating insurers, she said, citing the Terrorism RiskInsurance Act, first enacted in 2002 and up for renewal again thisyear. “The more state regulation we can keep, the better,” shetestified.