WASHINGTON--NAIC President Walter Bell today ruled out support by state regulators for a safe harbor for small insurers from antitrust laws in a post-McCarran-Ferguson Act world.

In comments after a speech to life insurance agents meeting here, Mr. Bell, also insurance commissioner of Alabama, said it was essential that small insurers have access to claims and other data in order to remain competitive.

He acknowledged, however, that removing large insurers from the mix would make it too expensive for small insurers to access the data, and also make it difficult for Insurance Services Office (ISO) to remain in business.

Mr. Bell was extremely assertive in saying that continued state leadership in insurance regulation was the way to go. He made his comments at a Capitol Hill event for the presidents-elect of the National Association of Insurance and Financial Advisers and selected local associations.

Noting the quick response of state insurance regulators to a tornado a year ago in Enterprise, Ala., in which 10 children were killed when a school cafeteria collapsed, Mr. Bell said, "It didn't take me long to figure out that states are the best place to regulate insurance--not Washington, D.C."

He added, "State-based regulation is the best system."

He acknowledged that "there is strong momentum" in the Senate for legislation repealing McCarran-Ferguson.

He said the primary sponsors--including Sen. Trent Lott, R-Miss.; Sen. Pat Leahy, D-Vt., chairman of the Senate Judiciary Committee; Sen. Arlen Specter, R-Pa., ranking minority member of the Judiciary panel; and Sen. Harry Reid, D-Nev., Senate majority leader--have the power to authorize committee action on the bill at any time.

He said a number of Senate committees have held hearings on the issue, noting that the bill has strong support in the House, although no hearings on the issue have yet been held in that chamber.

He also said that insurance commissioners would make themselves available to members of Congress to discuss the issue at any time. The first thing they would tell members of Congress, he said, was that a "convergence of issues"--notably claims management and allegations of illegal activities by insurance brokers--and not antitrust violations, prompted members of Congress to introduce the McCarran-Ferguson Act repeal legislation.

But, he said, "the system worked." Noting huge fines imposed on Marsh as a result of an alleged bid-rigging scandal, he said "existing federal and state laws have proven sufficient to combat alleged wrongdoing in the insurance industry. Congress should carefully examine the implications of McCarran-Ferguson before repealing" the exemption.

"Act once, but consider it twice" before repealing McCarran-Ferguson, he said. "There is no smoking gun" that demands repeal of McCarran-Ferguson, he added.

Mr. Bell also said that a number of other bills that would impose additional oversight and responsibilities on insurers have been introduced as a result of the criticism of the industry's handling of claims from Hurricanes Katrina and Rita.

But, he said, "the stars are aligned," meaning that all components of the insurance industry have voiced support for McCarran-Ferguson.

"Ironically," he said, "the McCarran-Ferguson repeal legislation has taken the focus totally away from supporters of the Optional Federal Charter."

He also defended the industry's handling of claims resulting from Hurricanes Katrina and Rita.

Asked to respond to comments by Sen. Lott at a hearing last week that the industry's conduct in handling those claims was "outrageous, arrogant and mean-spirited," and that state Attorney General Jim Hood had "a lot of evidence of misconduct and fraud" by State Farm in handling of claims, Commissioner Bell said he had talked to a lot of chief executive officers of companies involved in insuring Mississippi homeowners, and that "they did the right thing.

"They went overboard to protect the consumers in handling claims," Mr. Bell concluded.

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