A network of special laws has long insulated the insurance business from a lot of the competition that rages in other industries. But changing attitudes on the part of courts, regulators and lawmakers are rewriting the rule book, and forcing insurers to live with a lot more competition.

Take, for instance, the question of the sales commissions paid to insurance agents. Stockbrokers and real estate brokers charge separately for the products they sell and the selling service, and in recent years discount operations have sprung up that prosper by attracting customers with a lower price for the service component of the transaction. In other businesses, such as travel, the compensation for the agent is built into the price the consumer pays, but a buyer with real clout -- a corporate travel department, say -- can at least try to dicker for a piece of that sales commission, either as an outright rebate or in the form of special services.

In the insurance business, however, not only are the sales commissions and insurance rates coupled in one price, but also every state has laws that flatly forbid any rebating of that sales commission. In 1892, a court okayed such state legislation, and the case has been considered settled ever since -- until 1977, that is, when a Miami insurance agent who wanted to go into semi-retirement went into state court to challenge the Florida law. He wanted to continue to handle the business of some of his easier clients, and pass back to them some of the commission he earned from the insurance companies.

The agent died before the state Supreme Court could rule on the controversy, but the Dade County consumer advocate took up the issue. Just before Labor Day, the state Court of Appeals in Tallahassee struck down the law as an overreach by the legislature, because the judges could see no connection between a ban on sales commission rebates and the public welfare at stake: the financial well-being of the insurance carrier. The law is still alive, pending review of the case by the Florida Supreme Court. And the other states will not automatically follow Florida even if the higher court upholds the appellate judges. But the wind of change can be felt.

Similarly, in Michigan a new law went into effect at the start of last year that forbid insurance companies from using rates arrived at jointly through a rate bureau in pricing policies covering workers' disabilities. The result, state Insurance Commissioner Nancy A. Baerwaldt told a congressional committee last month, has been a 43 percent decrease in the cost of such policies. Companies are competing hard for the business, she says, but are continuing to make enough on the coverage to stay solvent.

The biggest change, however, would be for Congress to repeal the McCarren- Ferguson Act, the 1944 statute that grants the insurance industry a partial exemption from the antitrust laws, as long as combined rate-setting activities (which would be unlawful in most other industries) are regulated by state commissions. The problem is that state regulation -- at least in many jurisdictions -- is less than strict, allowing the industry "to drift along in a sort of never-never land between regulation and competition," according to J. Robert Hunter. Hunter, a former Federal Insurance Administration official, and Ralph Nader founded the National Insurance Consumers Organization.

NICO and similar groups have been urging Congress to do away with McCarren-Ferguson. "Overworked, underfunded and even uninformed, state insurance regulators are simply incapable of providing the type of scrutiny found in energy or securities regulation," Hunter argues. He says that in 20 states, there is not a single actuary on the staff of the insurance regulatory agency, and the other 30 states together have a total of only 61.

The insurance companies insist that McCarren-Ferguson actually spurs competition by allowing small companies that could not, based on cases in their own files, set fair rates for new kinds of insurance to draw on the combined experience of the whole industry. Without shared data, these smaller firms would simply stay out of many markets, the industry predicts.

The odds are that McCarren-Ferguson is not going to be jettisoned any time soon. But that does not mean that change is being confined to isolated state actions. The industry itself has been changing, moving away from the cartel-like behavior that the statute was meant to protect.

Rather than rating bureaus that insurance companies used to belong to -- organizations that required members to adhere to set rates and policy forms -- insurers now are sharing data through the Insurance Services Office, which, says Senior Vice President Mavis A. Walters, encourages companies to make their own pricing decisions. ISO merely develops actuarial information that each company can use as it wishes, she explains.

And even Hunter admits that there are significant price variations now from one company to another on similar policies. The problem, he says, is that these abilities to strike bargains happen mostly in business insurance, where the buyer has economic power. Most individuals shopping for something as ordinary as car insurance find little play in the quoted rates, he says.

But the kind of competition now found in business insurance prices would have been unheard of 20 years ago. And there's unquestionable evidence that the trend is toward more competition. The current debate, in fact, is not over the direction of the trend, but merely the pace of the change.