The insurance industry is one of Washington's fiercest and best-funded lobbies, so it rarely gets surprised. But last week several industry representatives privately acknowledged amazement that their most important federal benefit -- an antitrust exemption -- is in danger.

Angry with how insurers have been treating Hurricane Katrina victims and others, the chairman and the ranking Republican on the Senate Judiciary Committee, Sen. Patrick Leahy (D-Vt.) and Sen. Arlen Specter (R-Pa.), as well as Senate Majority Leader Harry Reid (D-Nev.), have joined forces to propose a repeal of the 62-year-old exemption, known as the McCarran-Ferguson Act.

"This is the big one," said Carl Parks, senior vice president of the National Association of Mutual Insurance Companies and a leader in the effort to save the exemption. "We are upset and disappointed."

The insurers say they are doing nothing wrong. Yet lawmakers are outraged on behalf of constituents who believe they have not been properly compensated for their property losses.

Sen. Trent Lott (R-Miss.), who lost his house during Katrina and is a co-sponsor of the legislation, has said that even "the nightmares of FEMA" did not prepare his constituents for their "abandonment by insurance companies."

McCarran-Ferguson provides insurers with an exemption from federal antitrust laws so that thousands of companies can exchange and aggregate data on accidents and injuries. They use that information to formulate the rates they charge their customers.

The exemption can operate only if states regulate the insurers, and lately a growing number of lawmakers have complained that some states have failed to do so. Hence the legislation -- and its companion bill in the House -- which would repeal the exemption and impose regulation by the consumer-focused Federal Trade Commission.

Large insurers that have enough data to set rates themselves have been proposing a modified repeal of McCarrin-Ferguson for years, but only if companies can opt to replace state regulation with a more compliant captive federal regulator. The new legislation, however, would add stiff federal regulation on top of the state regimen.

"The concern is that the industry could end up with double regulation," said Stanton D. Anderson of the U.S. Chamber of Commerce.

Insurers are beginning to muster their forces for an epic battle. Some of the bigger firms are hoping that the friendly-federal-regulator option will emerge somehow. But Parks and others who represent smaller insurers are not taking any chances.

The National Association of Mutual Insurance Companies has already created a "war room" that is targeting the districts and states of lawmakers who might be sympathetic or persuadable. It is hunting for insurers with employees in those places whom they can train to lobby their elected representatives. A broad coalition of insurance lobbies is also in the offing.

Parks, 60, knows this ground well. He has worked in public affairs for the insurance industry on and off since 1969, first for Allstate and later for the Property Casualty Insurers Association of America. In between, he helped the Credit Union National Association stage a huge grass-roots lobbying effort that persuaded Congress to pass a bill overturning a Supreme Court decision that would have hamstrung credit unions.

Now he has an even bigger fight. "This is an issue that we have to win outside the Beltway," Parks said. "We think we will win when we communicate our message."

Lobbying Winner -- and LoserThe U.S. Chamber of Commerce and the affiliated U.S. Chamber Institute for Legal Reform have broken their own record for expenditures on lobbying. Their combined total skyrocketed to $49.2 million for the second half of 2006, more than double the $23.5 million they reported for the first six months of the year. The latest six-month period shattered their earlier record of $30.1 million, set during 2004's first half, PoliticalMoneyLine said.

The institute, which alone spent $17.8 million in the second half of 2006, does all manner of lobbying and research to fight trial lawyers. The rest of the Chamber buys issue advertising and houses a stable of lobbyists and policy analysts.

By contrast, the National Association of Manufacturers -- the Chamber's onetime rival -- spent just $3.6 million in the second half of 2006, down dramatically from $9.6 million in the year's first six months. NAM said the 63 percent decline resulted from its withdrawal from lobbying on the asbestos bill that it wanted but failed to get.

NAM was outpaced in lobbying expenditures in last year's second half by a wide range of groups and individual companies. Twenty of these spent more than $5 million during the period.

Thank You, Mr. ChairmanIf it's good to be a Democrat on K Street these days, it's even better to be a Democrat who once worked for a current chairman of a congressional tax-writing committee. That's clearly where the money is. Timothy E. Punke, a former trade aide to Chairman Max Baucus (D-Mont.) of the Senate Finance Committee, was named a partner of Monument Policy Group, a lobbying firm. His new clients include heavyweights such as Microsoft and the Pharmaceutical Research and Manufacturers of America.

Former Baucus chief of staff Jeffrey A. Forbes of Cauthen Forbes & Williams also has a slew of new clients. They include Merck, Genentech, Ford and Intuit.

William A. Signer, a former staffer to Chairman Charles B. Rangel (D-N.Y.) of the House Ways and Means Committee, has a new job -- managing director of health-care and tax practices at Carmen Group. "His experience in understanding Chairman Rangel's goals and motivations are invaluable to clients," said David M. Carmen, president of the firm. Signer's ties to Rangel, Carmen added, were "definitely a factor" in his hiring.

A Republican Purge on K?John Feehery has left the Motion Picture Association of America to start his own lobbying firm, the Feehery Group. Feehery, 43, joined the movie lobby with great fanfare in 2005 to help silence sotto voce attacks by congressional Republicans, then in the majority, on the group's chief executive, former congressman Dan Glickman (D-Kan.), and on left-leaning Hollywood. Feehery had been the spokesman for then-House Speaker J. Dennis Hastert (R-Ill.) and a veteran GOP leadership aide.

But last month, the MPAA named Seth Oster, a Democrat, as executive vice president for communications, in effect taking part of Feehery's portfolio. My colleague at, Mary Ann Akers, reports that lobbyists worry that the move might presage a citywide purge of Republicans. But Feehery professes no bitterness. "It was a good time for me to start my own business," he said. "It gives me a greater range to do things I want to do." The MPAA will be one of his first clients, he added.

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