Insurance companies exempt from U.S. antitrust regulations
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WASHINGTON – Feb. 16, 2007 – True or false: U.S. antitrust laws apply to Realtors but not the insurance industry. Answer: True. Federal oversight does not apply to insurers’ anti-competitive conduct, such as price-fixing, agreements not to pay and market allocations.
But yesterday, the U.S. House and Senate introduced bills to change that status, led by Senate Minority Whip Trent Lott (R-Miss.), who lost a home in Hurricane Katrina, turning him into a stalwart critic of insurance industry policies. Lott also remains embroiled in a lawsuit against State Farm over hurricane damage.
“After Hurricane Katrina we learned a lot of lessons,” says Lott, noting that he found out “to my absolute horror that the insurance industry is not covered by the antitrust laws. … This is wrong and the Senate, in a bipartisan way, should, and I believe will, correct it.”
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Sen. Arlen Specter (R-Pa.) joined Lott in introducing the bill. In the House, Rep. Gene Taylor (D-Miss.), Rep. Pete DeFazio (D-Ore.), Rep. Bobby Jinda (R-La.), Rep. Walter Jones (R-N.C.) and others introduced a similar bill. Taylor, who also lost a home to Hurricane Katrina, says, “The insurance industry is the only industry exempt from the laws intended to protect consumers.”
The bill has strong support among other influential lawmakers too, including Senate Majority Leader Harry Reid (D-Nev.) In a statement, Reid echoed the thoughts of many lawmakers: “If insurers around the country are operating in an honest and appropriate way, they should not object to being answerable under the same federal antitrust laws as virtually all other businesses.”
The bills, called the Insurance Industry Competition Act of 2007, would empower the U.S. Justice Department and Federal Trade Commission to oversee some insurance industry operations, though individual states would continue to regulate the industry.
The insurance industry opposes bill, pushing for a global look at the way individual states operate rather than a change in federal oversight. “The problem is hurricanes, not insurance companies,” says Dennis Kelly, a spokesman for the American Insurance Association.
Lawmakers have harsh words for the insurance industry, however. Taylor calls State Farm’s recent announcement to pull out of Louisiana a “marketing gimmick.” He says the company is “winking at its competitors” and that they’ll probably start writing policies again in a few months – but at much higher rates.
“I personally believe that the Big Three insurers said, ‘Let’s don’t pay claims’ after Katrina,’” Taylor says. “It’s wrong. Unfortunately, it’s legal. But it ought to be illegal.”
Source: McClatchy Newspapers, Maria Recio
Orlando Homes for Sale
WASHINGTON – Feb. 16, 2007 – True or false: U.S. antitrust laws apply to Realtors but not the insurance industry. Answer: True. Federal oversight does not apply to insurers’ anti-competitive conduct, such as price-fixing, agreements not to pay and market allocations.
But yesterday, the U.S. House and Senate introduced bills to change that status, led by Senate Minority Whip Trent Lott (R-Miss.), who lost a home in Hurricane Katrina, turning him into a stalwart critic of insurance industry policies. Lott also remains embroiled in a lawsuit against State Farm over hurricane damage.
“After Hurricane Katrina we learned a lot of lessons,” says Lott, noting that he found out “to my absolute horror that the insurance industry is not covered by the antitrust laws. … This is wrong and the Senate, in a bipartisan way, should, and I believe will, correct it.”
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Sen. Arlen Specter (R-Pa.) joined Lott in introducing the bill. In the House, Rep. Gene Taylor (D-Miss.), Rep. Pete DeFazio (D-Ore.), Rep. Bobby Jinda (R-La.), Rep. Walter Jones (R-N.C.) and others introduced a similar bill. Taylor, who also lost a home to Hurricane Katrina, says, “The insurance industry is the only industry exempt from the laws intended to protect consumers.”
The bill has strong support among other influential lawmakers too, including Senate Majority Leader Harry Reid (D-Nev.) In a statement, Reid echoed the thoughts of many lawmakers: “If insurers around the country are operating in an honest and appropriate way, they should not object to being answerable under the same federal antitrust laws as virtually all other businesses.”
The bills, called the Insurance Industry Competition Act of 2007, would empower the U.S. Justice Department and Federal Trade Commission to oversee some insurance industry operations, though individual states would continue to regulate the industry.
The insurance industry opposes bill, pushing for a global look at the way individual states operate rather than a change in federal oversight. “The problem is hurricanes, not insurance companies,” says Dennis Kelly, a spokesman for the American Insurance Association.
Lawmakers have harsh words for the insurance industry, however. Taylor calls State Farm’s recent announcement to pull out of Louisiana a “marketing gimmick.” He says the company is “winking at its competitors” and that they’ll probably start writing policies again in a few months – but at much higher rates.
“I personally believe that the Big Three insurers said, ‘Let’s don’t pay claims’ after Katrina,’” Taylor says. “It’s wrong. Unfortunately, it’s legal. But it ought to be illegal.”
Source: McClatchy Newspapers, Maria Recio
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