Posted on 23 Feb 2010
The National Association of Professional Insurance Agents (PIA) is hailing the elimination of medical malpractice insurers from the draft of a bill restricting the limited federal insurance antitrust exemption under the McCarran-Ferguson Act.
According to the draft of the bill, to be called the Health Insurance Industry Fair Competition Act, posted on the House Rules Committee website as "text of bill to be introduced," the scope of the bill has been narrowed to cover health insurers, but not medical malpractice insurers.
"The inclusion of medical malpractice insurance, a property/casualty product, was particularly inappropriate in that it did not relate directly to health insurance," said PIA National Director of Federal Affairs Mike Becker. "A reduction in medical malpractice insurance rates is best achieved through separate legislation addressing tort reform."
"It is conceivable that this proposal could get drawn into President Obama's healthcare reform plan and be changed or amended on the House floor," Becker cautioned. "But as the draft stands now, it's improved." He added PIA will oppose any effort to amend the legislation to include medical malpractice or any other line of insurance. PIA is a participant in a coalition of property/casualty insurers opposing repeal of McCarran-Ferguson.
The McCarran-Ferguson Act assigns the regulation of insurance to the states, providing them with the authority to enforce antitrust laws that prohibit anti-competitive activities such as price-fixing or market allocation. The primary purpose of the limited federal antitrust exemption provided under McCarran-Ferguson is to permit insurers to share data on insurance losses after the fact. This allows small and mid-sized insurers to develop sound actuarial models and sound pricing strategies that they could not develop with their own limited policyholder loss experiences.
"The limited federal antitrust exemption under the McCarran-Ferguson Act fosters robust competition in the marketplace that benefits consumers," said PIA National Executive Vice President & CEO Leonard C. Brevik. "It enables small and mid-sized insurers to offer consumers competitively priced insurance products."
"There are almost 4,000 insurance companies in the United States," Brevik said. "Many are small and mid-size insurance companies that rely on jointly collected, pooled historical loss data to underwrite their policies. If this were no longer allowed, many of these companies could be forced out of business, with just a relative handful of companies remaining."
"We've seen what happens when there are only a handful of large financial institutions, regulated inadequately by the federal government," Brevik said. "It led to the financial meltdown. Congress should not unintentionally repeat that mistake by restricting competition in the insurance industry and encouraging the creation of a handful of 'too big to fail' companies. While this bill is still ill-advised, this change makes it less onerous and protects competition in the marketplace."