STATES' SUIT RAISES QUESTIONS

STATES' SUIT RAISES QUESTIONS

The chairman of the House Judiciary Committee said Friday that the multiple antitrust lawsuits filed Tuesday against the insurance industry raise questions about the industry's federal antitrust exemption provided under the McCarran-Ferguson Act.

Rep. Peter W. Rodino Jr., D-N.J., said, This landmark antitrust suit points to the need for a careful and immediate re-evaluation of the McCarran- Ferguson exemption and the entire regulatory mechanism for this industry so vital to all Americans.Attorneys general in at least eight states filed similar lawsuits charging dozens of U.S. and British insurers, reinsurers, trade associations and brokers with antitrust violations. Three additional states are expected to file similar lawsuits soon.

The lawsuits accuse four large insurers, Hartford Fire Insurance Co., Hartford, Conn.; Allstate Insurance Co., Northbrook, Ill.; Aetna Casualty & Surety Co., Hartford, Conn.; and Cigna Corp., Philadelphia, among others, of conspiring to shrink the coverage provided under standard commercial liability policies.

The suits allege that the companies used their market power to make sure none of their competitors could sell broader coverage.

In the past two sessions of Congress, the House Judiciary Subcommittee on Monopolies and Commercial Law considered legislation that would overhaul the McCarran-Ferguson Act, which exempts the business of insurance from federal antitrust laws.

Rep. Rodino, who is chairman of the subcommittee, said the antitrust suits raise questions of critical interest to the House Committee on the Judiciary.

If the facts asserted in the complaints are accurate, a number of disquieting issues arise, Rep. Rodino said. Why was the state court system blamed for the liability insurance crisis, and what will be the impact on consumers of the new restrictive tort laws passed by certain states in response to such claims?

Why did the Department of Justice, which was advised of potential wrongdoing, fail to pursue its own investigation? Rep. Rodino said.

Rep. Don Edwards, D-Calif., has introduced a bill that would remove the industry's antitrust exemption but it would leave the day-to-day control in the hands of the state regulators, he said.

Rep. Edwards said the antitrust lawsuits will really help our bill. I think we have the votes to pass the bill.