On September 19, 2007, a paper entitled The Assault on the McCarran-Ferguson Act and the Politics of Insurance in the Post-Katrina Era, by Lawrence S. Powell, Ph.D., was presented at the National Association of Mutual Insurance Companies conference. The paper can be found by clicking here or here. The paper identifies issues related to the possible repeal of the McCarrran-Ferguson Act (“McCarran”), which provides the insurance industry with a limited antitrust exemption.
The author notes that there is no need to repeal McCarran since the industry enjoys a healthy level of competition. Furthermore, McCarran’s limited exemption does not harm customers, but repealing it would impede competition to the detriment of customers. Finally, the paper suggests that Congress need not repeal McCarran in order to achieve cost savings for the consumer.
The author states that while the proposal to repeal McCarran arises from the industry’s perceived response to the hurricanes of 2004 and 2005, fundamentally it is a misunderstanding of how the insurance market is regulated. The paper concludes with the observation that a repeal of McCarran would created legal and operational hurdles that would be to the detriment of both the industry and the consumer.
