Senator Trent Lott, a fierce critic of the insurance industry's response to Hurricane Katrina, joined Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., and ranking member Sen. Arlen Specter, R-Pa. on the Senate floor today to introduce a bill repealing the insurance industry's federal antitrust exemption.
House members, including Rep. Gene Taylor, D-Bay St. Louis,, Rep. Pete DeFazio, D-Ore., Rep. Bobby Jindal, R-La., are expected to announce the introduction of identical legislation in the House at an afternoon press conference on .Lott's home was destroyed in the hurricane and is part of a lawsuit against State Farm & Casualty Co.
The Insurance Industry Competition Act of 2007 would bring insurers under the scrutiny of the Federal Trade Commission by lifting the exemption they currently have under the McCarran-Ferguson Act. States would continue to regulate insurance companies but the FTC would have authority to review any "unfair methods of competition" such as price-fixing.
The bill is the latest effort by lawmakers to bring the insurance industry to task for refusing to pay claims of wind damage from Katrina by blaming water damage, covered by the federal government's flood insurance program.
At the end of this month, the House Financial Services Committee's oversight and investigations subcommittee chaired by Rep. Mel Watt, D-N.C. will hold a hearing on whether private insurance companies have been properly paying claims after Hurricane Katrina. The McCarran-Ferguson Act currently exempts the "business of insurance" from federal antitrust laws, to the extent that it is regulated by the states.McCarran-Ferguson grants the insurance industry a limited antitrust exception so that the sector may collectively collaborate for purposes of data collection and rate-and-form developments. It also exempts the sector from federal regulatory oversight as respects the "business of insurance," assigning that obligation "To the Several States."