08-R069

2008 -- S 2039

Enacted 02/27/08

S E N A T E R E S O L U T I O N

OPPOSING FEDERAL LEGISLATION TO REPEAL OR MODIFY THE

MCCARRAN-FERGUSON ACT

Introduced By: Senators Walaska, Blais, and Breene

Date Introduced: January 10, 2008

     WHEREAS, In response to the United States Supreme Court Decision in United States v.

South Eastern Underwriters Association, 322 U.S. 533 (1944), in which the Court ruled that

insurance is "interstate commerce" and therefore subject to regulation by the federal government,

Congress enacted, in 1945, the McCarran-Ferguson Act (15 USC 1011, et seq); and

     WHEREAS, The McCarran-Ferguson Act provides a limited insurance exemption from

federal anti-trust laws in order to ensure the viability of a healthy, competitive insurance market;

and

     WHEREAS, The insurance industry is competitive under traditional antitrust tests and is

made up of thousand of competitors, most of them small to medium-size insurers, with virtually

no barriers to new entrants; and

     WHEREAS, The Insurance Industry Competition Act of 2007 (S. 618/H.R. 1081) would

repeal the McCarran-Ferguson Act's limited Federal antitrust exemption and would authorize the

Federal Trade Commission and the federal Department of Justice to regulate "unfair competition"

and would further authorize the Federal Trade Commission to regulate other areas of the business

of insurance "to the extent not regulated by the states"; and

     WHEREAS, Repeal or substantial modification of the antitrust provisions of the

McCarran-Ferguson Act would interfere with efforts to promote a highly competitive insurance

marketplace within the respective states; and would, under S. 618/H.R. 1081, create multiple,

inconsistent layers of Federal and State regulation that would narrow the areas of competition;

and

     WHEREAS, Elimination or substantial modification of the antitrust provisions of the

McCarran-Ferguson Act would not result in increased availability or lower cost of insurance; and

     WHEREAS, Elimination or substantial modification of the antitrust provisions of the

McCarran-Ferguson Act could subject certain regulated collective insurer activities, such as the

joint development of standardized insurance policy language, collective trending of shared

historical data, or mandatory residual markets, to increased antitrust scrutiny; and

     WHEREAS, Increased antitrust scrutiny of these activities could cause uncertainly in the

industry, resulting in a disruptive transition period which could impair companies' competiveness,

increase concentration of the industry, increase litigation, add unnecessary administrative costs,

and ultimately result in higher consumer costs, with no consumer benefits; now therefore be it

     RESOLVED, That this Senate of the State of Rhode Island and Providence Plantations

hereby joins the American Legislative Exchange Council in opposing S. 618/H.R. 1081 and finds

that the multi-layered regulatory scheme as envisioned by S. 618/H.R. 1081 would not make the

insurance industry more competitive or more responsive to consumer concerns and would likely

lead to higher premiums for policyholders and confusion for consumers; and be it further

     RESOLVED, That this Senate urges members of the United States House of

Representatives and Senate to refrain from any efforts to weaken competition or to promote

excessive regulation by repealing or diluting the antitrust provisions of the McCarran-Ferguson

Act; and be it further

     RESOLVED, That the Secretary of State be and he hereby is authorized and directed to

transmit duly certified copies of this resolution to the members of the Rhode Island Congressional

Delegation and to the President of the United States, George W. Bush.

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LC00402

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