Resolution Urging Congress Not to Amend or Repeal the McCarran-Ferguson Act Exposed

The Resolution Urging Congress Not to Amend or Repeal the McCarran-Ferguson Act does not include adoption or approval information, but was included in the 1995 ALEC Sourcebook of American State Legislation. ALEC has attempted to distance itself from this piece of legislation after the launch of ALECexposed.org in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Resolution Text

Summary

Under the McCarran Ferguson Act of 1945 insurance regulation is reserved to the state. The Act further provided for state oversight over a portion of anti-trust law. Although the federal government maintains responsibility for enforcing laws against boycotts, coercion and intimidation, insurance companies were allowed to share claims data, subject to state law. Until recently, no state had prohibited insurance companies from sharing claims data.

Recent events in the property and casualty marketplace have suggested that states ought to prohibit sharing of claims data or that the McCarran-Ferguson Act should be repealed so that the federal government can prohibit the practice. Advocates for repealing McCarran-Ferguson cite that forbidding the sharing of data will promote competition. However, the reverse is true. The allowing of data to be shared benefits small companies that do not have the actuarial resources to asses risk and therefore promotes competition.

Model Resolution

WHEREAS the McCarran-Ferguson Act provides a limited federal antitrust exemption which is essential to a healthy, competitive insurance market and provides generally for state, rather than federal, regulation of the insurance business; and

WHEREAS the insurance industry is competitive under traditional antitrust tests and is made up of thousands of competitors, with virtually no barriers to new entrants; and

WHEREAS state regulation of insurance for insolvency and consumer protection has worked well in serving consumers' interests for more than 40 years; and

WHEREAS repeal or substantial modification of the McCarran-Ferguson Act would impede or preempt state efforts to promote a highly competitive insurance marketplace within the respective states; and

WHEREAS elimination or substantial modification of the McCarran-Ferguson Act would not result m increased availability or lower cost of insurance; and

WHEREAS elimination or substantial modification of the McCarran-Ferguson Act to prohibit or hamper the joint collection and sharing of essential industry data, or the pooling of risks, could cause uncertainty in the industry, resulting in a disruptive transition period which could impair companies' competitiveness, concentration of the industry, increased litigation, higher administrative costs, and ultimately higher consumer costs, with no consumer benefits; now, therefore, be it

RESOLVED that the legislature of the State of (state) hereby requests that Congress maintain the current system of state regulation of insurance and make no changes in the McCarran-Ferguson Act; and be it further

RESOLVED that the clerk of the (House of Representatives or Senate) transmit copies of this resolution to the President and Vice President of the United States and to each member of the Congress of the United States.