Reps. DeFazio, Taylor Defend Taxpayers from Insurance Industry Greed

Introduce legislation to repeal insurance industry’s antitrust exemption

WASHINGTON, DC—U.S. Congressmen Peter DeFazio (D-Ore.) and Gene Taylor (D-Miss.) recently introduced legislation to remove the federal antitrust exemption from the insurance industry. This legislation is particularly important in light of the abuses by American Insurance Group (AIG), operating as if they were above the law. In fact, the current insurance exemption from antitrust laws gave AIG a free pass to become “too big to fail,” and now the U.S taxpayers are on the hook to bail them out or risk even further turmoil in an already fragile economy. This legislation would close that exemption.

“The fact that the insurance i ndustry is exempt from federal anti-trust laws is outrageous. Shouldn’t the $170 billion bailout of AIG be the third and final strike to the “business as usual” attitude toward the insurance industry? We cannot tolerate these rampant abuses of the system at a massive cost to tax payers,” DeFazio said. “AIG was gambling with people’s life savings and lost it all to speculative and shady transactions and contributed to the current crisis. We must insure this never happens again.” Congressman Peter DeFazio

“Why is anyone surprised?” Taylor said. “Insurance companies believe that they are above the law. When it comes to the federal laws, they are. After Hurricane Katrina, insurance companies took advantage of the lack of federal oversight to bill the National Flood Insurance Program for wind damage. Taxpayers also paid for FEMA trailers, home repair grants, subsidized loans, and tax deductions for property damage that insurance should have covered.”

The Insurance Industry Competition Act would repeal the exemption and give the Department of Justice and the Federal Trade Commission the authority to apply the antitrust laws to anticompetitive behavior by insurance companies. This Act would not affect the ability of each state to regulate the business of insurance.

The insurance industry has operated beyond the reach of America’s antitrust laws for more than six decades when the McCarran-Ferguson Act was passed by Congress in 1945. The McCarran-Ferguson Act, which gives states the authority to regulate the “business of insurance,” also exempts the business of insurance companies from the federal antitrust laws so they can collude to prices.

Please join us in writing or calling Congressman Peter DeFazio in support of his proposed legislation to repeal the insurance industry’s anti-trust exemption.

Washington, DC Office	Eugene Office	Coos Bay Office	Roseburg Office
2134 Rayburn H.O.B.	405 East 8th Ave. #2030	125 Central, Suite 350	612 S.E Jackson Street, Room 9
Washington DC, 20515	Eugene, OR 97401	Coos Bay, OR 97420	Roseburg, OR 97470
Phone: (202) 225-6416	Phone: (541) 465-6732	Phone: (541) 269-2609	Phone: (541) 440-3523

Or call his Oregon office toll-free at 1-800-944-9603
Or E-mail Congressman DeFazio at: www.house.gov/formdefazio/contact.html

OSAR writes letter of support to US Representative Peter DeFazio

March 26, 2009
The Honorable Peter DeFazio
2134 Rayburn H.O.B.
Washington DC, 20515

Re: Your proposed legislation to remove the insurance industry’s federal antitrust exemption

Dear Congressman DeFazio:

As Chairman of Oregonians for Safe Auto Repair (OSAR), I was authorized by our coalition to write to you in regards to the legislation you and Congressman Gene Taylor introduced to repeal the McCarran-Ferguson Act, which gives the insurance industry a much undeserved antitrust exemption. Thank you for sponsoring this legislation.

We would like to help in any way we can to repeal this act – such as providing documentation, testify before Congress, whatever it takes. OSAR coalition members own shops and some dealerships around Oregon.

This legislation comes at an ideal time. OSAR is sponsoring Oregon Senate Bill 617, which is an anti-collusion bill that will prevent insurers from having Direct Referral Program (DRP) contracts with auto body shops.

Last week the Oregon Senate Consumer Protection Committee, chaired by Sen. Suzanne Bonamici, held a hearing on this bill. The DVD of the testimony is included. Giving testimony were shop owners – both independent and insurance connected (DRPs) – insurance industry representatives, lobbyists, a body shop technician and a customer who was hurt by the insurance industry.

Unfortunately, a portion of the auto insurance industry is also abusing their exemption from the anti-trust legislation by colluding and setting repair claim prices within the auto insurance market. That’s what we are working to eliminate.

Our SB 617 will prevent insurers from entering into contracts with their DRP shops and in essence squeezing these body shops to do less than quality work.

It should also shore-up a loop-hole in current legislation. Insurance companies operate with the full knowledge that they can at any time, deny legitimate elements of any repair, because current Oregon law does not adequately address consumers’ rights

The oversight of SB 617 will be in the hands of the Attorney General. The Insurance Commissioner is not enforcing the current legislation, which is part of the problem.

Enclosed in addition to the DVD are copies are two of the testimonies presented at the Oregon Senate Consumer Protection Committee hearing, March 17, 2009.

Please let us know how we can assist you.

Sincerely,
Leif Hansen, Chair, OSAR

Please join us in writing or calling Congressman Peter DeFazio in support of his proposed legislation to repeal the insurance industry’s anti-trust exemption.