WHY DO INSURERS HAVE ANTITRUST EXEMPTION?

In 1868, the U.S. Supreme Court held that insurance is not interstate commerce and, therefore, insurers are not subject to federal regulation. The court reversed itself in 1944, and insurers were first subject to the federal antitrust laws that ensure competition in the marketplace.

The industry appealed to Congress to reinstate the old rules, and in 1945, lawmakers passed the McCarran-Ferguson Act, which gave states broad authority to regulate the "business of insurance" without interference from federal regulation. To the extent that insurers were regulated by state law, federal antitrust law no longer applied to them.

In the years since, attempts to transfer regulatory authority back to the federal government have been opposed by states and the insurance industry.

Insurance companies warn that repealing the 1945 law would result in fewer insurance companies, ultimately harming consumers. The House and the Senate are considering legislation that would eliminate the exemption and ensure that insurers do not engage in price-fixing or bid-rigging.

-- Madonna Lebling