Will 110th Congress Open the Door on the McCarran-Ferguson Act?Posted 2/2/2007
By Robert L. Redding, Jr.
The 110th Congress has an opportunity to revisit repeal of the McCarran-Ferguson Act. It is encouraged by the last Congress' interest in insurance reform, life insurance companies' desire for federal regulation of their industry and consumers and small business' longing for the regulation of an industry that could create a more level playing field.
Fear in the insurance industry that strong federal regulation would follow the U.S. Supreme Court decision that the insurance industry was part of "interstate commerce," and therefore was covered by federal antitrust laws, led to Congress passing the McCarran-Ferguson Act in 1945. The act allowed states to go ahead and continue regulating the insurance industry, providing that no act of Congress could supercede this state regulation unless it specifically related to the insurance business. The act also exempted the "business of insurance" from federal antitrust laws as long as it is regulated by the states.
Interest in repealing McCarran-Ferguson is not new. As discussed previously in AutoInc., the 103rd Congress - which was the last Congress to be controlled by Democrats - made a run at repealing and then reforming McCarran-Ferguson. Back then, the White House was occupied by the Clinton administration, and health care was at the top of the U.S. political agenda. Health care legislation was the engine behind any changes to McCarran-Ferguson at that time.
What began as a repeal of the McCarran-Ferguson Act became a more limited reform package. Then House Judiciary Committee Chairman Jack Brooks, D-Texas, led the fight for repeal of the act. Howard Metzenbaum, then a democratic senator from Ohio, was the strongest proponent in the Senate for repeal. In early negotiations with Brooks, a more limited McCarran-Ferguson Act reform initiative became the legislative proposal.
The 103rd Congress was not successful in reforming McCarran-Ferguson. A similar reform package - H.R. 2401, the Insurance Competitive Pricing Act of 2005 - was offered in the last Congress by Rep. Peter DeFazio, D-Ore. The preamble of the bill offered, "To modify the antitrust exemption applicable to the business of insurance." The bill still allowed insurers to have specific exemptions as in the 103rd Congress compromise. This bill, referred to the House Committee on the Judiciary, did not move forward prior to Congress' adjournment. Repairers can view this legislation on the ASA legislative Web site, www.TakingTheHill.com.
There are several major hurdles prior to resolving the McCarran-Ferguson problem for repairers and consumers in the 110th Congress. First, the repair industry has to step forward to support repeal of the act. Second, working with policymakers, does a reform of McCarran-Ferguson provide the same relief for the industry as an outright repeal? Finally, is there interest in this Congress to address a very controversial issue such as McCarran-Ferguson?
ASA has encouraged dialogue in the collision repair industry about repeal of the McCarran-Ferguson Act. ASA's Collision Division is reviewing options for comment to those in Congress interested in repealing McCarran-Ferguson.
Even though we are very early in the first session of the 110th Congress, the early agendas for the various committees are taking shape. Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee, has given up his bid to retrieve insurance for his committee's jurisdiction. Hosted now by the House Financial Services Committee, Dingell has a long history of supporting insurance reform and this would have been a stimulus for the repeal or reform movement. House Financial Services Committee Chairman Barney Frank, D-Mass., and House Judiciary Committee Chairman John Conyers Jr., D-Mich., have not listed insurance reform as priority agenda items for their respective committees as of yet. Frank has indicated housing issue matters will be at the top of the list for the Financial Services Committee.
Certainly a ray of hope for repeal has been the interest of the Mississippi congressional delegation in insurance reform. U.S. Sen. Trent Lott, R-Miss., challenged the insurance industry in the last Congress with his introduction of total loss legislation placing bold reporting requirements for total loss vehicles on the insurance industry. But clearly the most interest has come from Rep. Gene Taylor, D-Miss., whose recent letter to Frank requested an investigation of insurance industry practices in the aftermath of Hurricane Katrina. In Congress, Taylor's detailed six-page letter stated, "I intend to offer legislation to eliminate the antitrust exemption that was granted to the business of insurance by the McCarran-Ferguson Act."
One major difference from the 103rd Congress is that this administration is less friendly to insurance reform than the Clinton White House as they sought major changes in the U.S. health care system.
The collision repair industry has the responsibility to debate the McCarran-Ferguson Act repeal issue and the impact this repeal might have on repairers and consumers. Reports as far back as 1982 indicated that states did not have the resources to effectively regulate the insurance industry. Coupled with the 50-state marketplace of regulation, few industries can engage with the insurance industry for message control to policymakers and regulators.
No one has suggested that repeal of the McCarran-Ferguson Act would solve all the insurance-related problems for repairers and consumers but it just might help level the playing field. Insurers have told ASA in years past that a repeal would not change the way insurers deal with repairers.
ASA supports repeal of the McCarran-Ferguson Act. To view more items related to this issue, go to www.TakingTheHill.com.
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