Bill To Repeal Insurance Anti-Trust Exemption Scored By Trade Units

WASHINGTON–Newly proposed House legislation to end the insurance industry's anti-trust exemption has been attacked by two insurer trade group who call it a "punitive bill hinging on a false premise."

The organizations said the introduction of the bill was an unfair exploitation of the public financial difficulties of insurance giant American International Group.

David A. Sampson, president and chief executive officer of the Property Casualty Insurers Association of America, said in a statement that the new legislation "uses the current controversy [over AIG] as a convenient cudgel to punish an entire industry, when in fact the existing crisis had nothing to do with the limited exemption that allows insurers to share loss data."

At the same time, Marliss McManus, a senior federal affairs director at the National Association of Mutual Insurance Companies, charged, "It's disappointing and unfortunate that members of Congress are trying to exploit the troubles of AIG for their own personal crusade."

They referred to legislation introduced yesterday by Rep. Gene Taylor, D-Miss., and Peter DeFazio, D-Ore., that would remove the federal antitrust exemption from the insurance industry but still maintain state regulation.

In her comments, Ms. McManus said that AIG's troubles are in no way related to the McCarran-Ferguson Act's limited antitrust provision and it appears that Rep. Taylor, and others, are confused about the act and how it works.

"To assert that the insurance industry is exempt from federal antitrust laws is completely inaccurate," she said. "The McCarran Ferguson Act allows for a very narrow and limited exemption for certain activates such as standardized policy language."

She said consumers have benefited from the law since 1945 because it has been responsible for creating a healthy and competitive market for insurers.

"If the McCarran-Ferguson Act were repealed, consumers would suffer the greatest because it would reduce competition, increase insurance costs and reduce availability in the marketplace."

Mr. Sampson said the McCarran-Ferguson Act does not hinder competition among insurers.

"In fact, it promotes competition in the marketplace by putting small and medium-sized companies on a level playing field with much larger competitors, and it creates efficiencies for insurers that mean savings and choice for insurance buyers," he said.

"These savings are crucial to consumers during an economic downturn, and we call upon Congress to reject this misguided legislation," Mr. Sampson said.