Business of Insurance

The McCarran-Ferguson Act Adopted by Congress in 1945, the McCarran-Ferguson Act (cited as 15 USC 1011, et seq.) clarifies the power of individual States to regulate insurance and limits the application of many federal statutes to that industry. Section 1012(b) of the Act states that the Sherman, Clayton, and Federal Trade Commission Acts are only "applicable to the business of insurance to the extent that such business is not regulated by State Law." However, Sec. 1013(b) continues the applicability of the Sherman Act "to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation."

The McCarran-Ferguson Act: Anticompetitive or Procompetitive? In this article from Cato Institute's Regulation, Prof. Patricia M. Danzon of the Wharton School describes several proposals that have been made to repeal or limit the insurance antitrust exemption, and argues that the McCarran-Ferguson Act has not resulted in anticompetitive behavior and shoud not be amended or repealed.

Democrats Attack Insurers' Antitrust Exemption This Yahoo/Reuters article from 01/24/03 reports that a number of Democratic senators want to scale back the insurance industry antitrust exemption, which they say is partly to blame for the soaring cost of medical malpractice insurance. The senators charged that the M-FA exemption allows malpractice insurers to "collude to set rates, resulting in higher premiums than true competition would achieve." Similarly, see statements released in September, 2002, by Penn. Rep. Joe Hoffel and by Oregon Rep. Peter DeFazio. In the Yahoo article, an industry representative replied that the exemption is needed so that insurance companies can share data and perform risk evaluations.

Supreme Court Further Restricts Insurance Industry Antitrust Exemption This legal advisory from the firm of Foley & Lardner concludes that the Supreme Court's decision in Hartford Fire Ins. v. State of California (1993) is another illustration of its increasing willingness to apply federal antitrust laws to regulated industries such as insurance.