H.R. 1081 . Similar legislation may be introduced in the 111 th Congress. Currently, 15 U.S.C. The single exception to the blanket application of federal antitrust law to the "business of insurance," is, however, that both bills would have specified that the Federal Trade Commission (FTC) Act, "as it relates to areas other than unfair methods of competition" would continue to be applicable to the "business of insurance to the extent that such business is not regulated by State law." In addition, they would each have restored the authority of the Federal Trade Commission, pursuant to its 15 U.S.C. The Senate Judiciary Committee held a hearing on the issue entitled "The McCarran-Ferguson Act and Antitrust Immunity: Good for Consumers?" This possible consumer harm is one of the underlying reasons for the antitrust laws. Insurer cooperation and information sharing revolves around advisory organizations, also known as ratings bureaus. Further industry cooperation, both through the advisory organizations and other state-created mechanisms, occurs in state residual market mechanisms and state guaranty funds. If McCarran-Ferguson antitrust protection for "the business of insurance" is, in fact, curtailed or abolished, many lawsuits challenging some of these insurer practices as violations of the federal antitrust laws are likely. If all of the cited examples of cooperation were found to be in violation, it would necessitate major changes in the operation of insurers, particularly small insurers which do not have large pools of information from their own experience. It is also possible that many of the cooperative activities that insurers engage in would be found to be permissible under the "state action" doctrine. Similar provisions were included in, for example, S. 84 , introduced by Senator Metzenbaum in the 103 rd Congress to repeal McCarran-Ferguson's antitrust exemption.
Identical, bipartisan bills, S. 618 and H.R. 1081, that would have eliminated the antitrust exemption for the "business of insurance" in the McCarran-Ferguson Act (15 U.S.C. §§ 1011-1015), in force since 1945, were introduced in the 110th Congress, and similar legislation may be introduced in the 111th Congress. The impact of S. 618 and H.R. 1081, had they been enacted, is unclear. They would each have amended 15 U.S.C. § 1012(b) to make the antitrust laws and the Federal Trade Commission (FTC) Act "as it relates to unfair methods of competition" specifically applicable to such business. The FTC Act, "as it relates to areas other than unfair competition" (emphasis added) would, however, have continued to apply to the "business of insurance" "to the extent that [it] is not regulated by State law." Due largely to the importance of information sharing to insurers, the insurance industry in the past has cooperated in a variety of ways, including sharing loss information, jointly developing policy forms and rates, operating residual market mechanisms, and participating in state guaranty funds. Some forms of cooperation, particularly joint rate making and mandatory advisory rates, have already been curtailed because of antitrust concerns. Other forms of industry cooperation, however, might be considered illegal under federal antitrust laws if legislation such as S. 618 or H.R. 1081 were to be enacted. The precise impact of such bills on the insurance industry would depend critically on future court decisions.
The cooperation that insurance companies currently undertake might be judged legally permissible, however, even notwithstanding any deletion of the antitrust exemption for "the business of insurance," under the "state action" doctrine. That doctrine immunizes from the federal antitrust laws actions by public or private entities that are legislatively mandated or authorized by the states. Similarly, before this area of law were settled, however, it would arguably involve numerous lawsuits. This report will be updated as events warrant.