Antitrust Agreement May Expand Insurance Choices, Trim Costs
WASHINGTON (AP) _ Consumers could get more insurance options and lower prices under an unusual legislative-industry agreement that would partially roll back the industry's 49-year-old exemption from federal antitrust laws.
After nearly two years of behind-the-scenes negotiations among consumer groups, insurance companies and congressional aides, the American Insurance Association agreed Thursday to support significantly narrowing the industry's antitrust exemption under the McCarran-Ferguson Act.
The exemption applies only to the insurance industry, and to all types, from property and casualty to health and life insurance.
Rep. Jack Brooks, D-Texas, chairman of the House Judiciary Committee, said the endorsement "represents the first breach in the wall of strident opposition from an industry that, understandably, has tried to protect its unique antitrust status among all other industries in America."
The proposal is subject to congressional approval, Brooks said he would try to push it through his committee next month.
The compromise supported by the insurance association, which represents 270 property and casualty insurers, would allow the industry to continue to share historical loss data, use common policy forms and pool huge risks, such as airports, energy facilities and skyscrapers.
But it would ban after two years a practice in which companies try to jointly project future cost and loss rates.
Consumer groups _ which point out that insurance represents consumers' single largest expense after food and shelter _ have railed against the exemption for years.
Mary Griffin, insurance counsel for Consumers Union, predicted the agreement should result in "heavy-duty pricing battles to get consumers' business, maybe better service and a broader range of products."
"Maybe they'll do better claim servicing. Maybe you'll be able to get through more quickly. Maybe they'll be a little more responsive," she said.
Consumer advocates say business people who suffer from high-priced insurance, such as day-care-center operators and nurse-midwives, should particularly benefit.
"Because insurers have enjoyed the exemption they haven't had to worry about price fixing. …