Insurance Exemption Repeal Urged

A special insurance investigative commission of the American Bar Assn. on Tuesday recommended repealing the 43-year-old McCarran-Ferguson Act, which gives the insurance industry an exemption from federal antitrust regulation.

The commission, which included some insurer or pro-insurer representatives who dissented from its findings, also urged that an agency with subpoena powers undertake an investigation to determine whether improper industry collusion manipulates insurance availability and cost.

The recommendations are subject to review by the Bar Assn.’s policy-making House of Delegates when it meets in Denver in February. Calls for ending the insurance industry’s federal antitrust exemption have been popular in the legal community.

California voters, in approving Proposition 103 in the Nov. 8 election, gave their approval to removing the industry’s state antitrust exemptions. A bill to remove the federal exemption won committee approval in the U.S. House this year, but it did not go further in Congress.

The commission said that under the McCarran-Ferguson Act, some collusion among insurers is permitted on a federal level. But it said it was unable to assess, without further data, whether improper collusion has in fact occurred.

The commission noted that it had steered clear in its deliberations of matters pertaining to a lawsuit by a number of state attorneys general, filed earlier in the year, accusing some companies of conspiring with one another to reduce the availability of liability insurance as a means of jacking up prices. That suit is pending in federal court in San Francisco.

The lawyer-dominated panel, issuing its report in Chicago, found insufficient evidence to establish any link between the courts expanding insurers’ tort liability and the recent crisis over the price and availability of insurance.

However, the panel was challenged on this point by commission members Lowell R. Beck, president of the National Assn. of Independent Insurers, and George L. Priest, a law professor at Yale.

“There are strong conceptual grounds and a substantial body of evidence demonstrating the link,” Priest said in a written dissent.