The president of the National Association of InsuranceCommissioners last week ruled out support by state regulators for asafe harbor for small insurers from antitrust laws in apost-McCarran-Ferguson Act world.

In comments after a speech to life insurance agents meetinghere, Walter Bell–who is also insurance commissioner ofAlabama–said it was essential that small insurers have access toclaims and other data to remain competitive.

Earlier this month, Sen. Trent Lott, R-Miss.–who is championinga bill that would strip the insurance industry of its federalantitrust exemption–suggested that concerns about the impact onsmaller insurers might be eliminated by simply allowing them tocontinue sharing data.

However, Mr. Bell said removing large insurers from the mixwould make it too expensive for small insurers to accessindustrywide data, and also make it impossible for private entitiesthat collect and provide shared data to maintain theirdatabanks.

Mr. Bell said continued state leadership in insurance regulationis the way to go. He made his comments at a Capitol Hill event forthe presidents-elect of the National Association of Insurance andFinancial Advisers and selected local associations.

Noting the quick response of state insurance regulators to atornado a year ago in Enterprise, Ala., in which 10 children werekilled when a school cafeteria collapsed, Mr. Bell said: “It didn'ttake me long to figure out that states are the best place toregulate insurance–not Washington, D.C.,” adding that “state-basedregulation is the best system.”

He acknowledged “there is strong momentum” in the U.S. Senatefor legislation repealing McCarran-Ferguson.

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

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

He also said insurance commissioners would make themselvesavailable to members of Congress to discuss the issue at any time.The first thing they would tell Congress, he said, is that a“convergence of issues”–notably claims management and allegationsof illegal activities by insurance brokers–and not antitrustviolations, prompted members to introduce the McCarran-Ferguson Actrepeal legislation.

However, he said, “the system worked.” Citing huge settlementsimposed on Marsh and other major brokers as a result of an allegedbid-rigging scandal, he said “existing federal and state laws haveproven sufficient to combat alleged wrongdoing in the insuranceindustry. Congress should carefully examine the implications ofMcCarran-Ferguson before repealing” the exemption.

“Act once, but consider it twice” before repealingMcCarran-Ferguson, he said, adding that “there is no smoking gun”that demands repeal of McCarran-Ferguson.

Mr. Bell also said that a number of other bills imposingadditional oversight and responsibilities on insurers have beenintroduced as a result of the criticism of the industry's handlingof claims from Hurricanes Katrina and Rita.

However, he added, “the stars are aligned” in defense of theantitrust exemption, meaning that all components of the insuranceindustry have voiced support for McCarran-Ferguson.

“Ironically,” he said, “the McCarran-Ferguson repeal legislationhas taken the focus totally away from supporters of the optionalfederal charter.”

He also defended the industry's handling of claims resultingfrom Hurricanes Katrina and Rita. Asked to respond to comments bySen. Lott at a recent hearing that the industry's conduct inhandling those claims was “outrageous, arrogant and mean-spirited,”and that Mississippi Attorney General Jim Hood had “a lot ofevidence of misconduct and fraud” by State Farm, Mr. Bell said hehad talked to many chief executive officers of companies insuringMississippi homeowners, and “they did the right thing.”

“They went overboard to protect the consumers in handlingclaims,” Mr. Bell concluded.