The Senate Attacks State Insurance Regulation on Two Fronts

***LEGISLATIVE ALERT*** DATE: April 10, 2006 TO: NCOIL Legislators FROM: Paul Donohue, NCOIL Director of State-Federal Affairs RE: Senate to Hold Hearing on Repealing Insurer Exemption Under McCarran- Ferguson Attached are  an April 5 BestWire article regarding Senator Specter's hearing announcement  the Senate Judiciary Committee membership list THE SENATE ATTACKS STATE INSURANCE REGULATION ON TWO FRONTS Sen. Arlen Specter (R-Pa), Chair of the Senate Judiciary Committee, announced today that on April 25 the Judiciary Committee will hold a hearing entitled, "The McCarran-Ferguson Act: Implications of Repealing the Insurers' Antitrust Exemption." The Act serves as a roadblock to those who are lobbying for federal regulation of insurance and would have to be repealed if congressional schemes such as the Optional Federal Charter or the SMART Act are to become law. The Committee's hearing announcement comes just days after introduction of the National Insurance Act of 2006 by Senators John Sununu (R-NH) and Tim Johnson (D-SD).

MCCARRAN-FERGUSON PROTECTS STATE REGULATION The McCarran-Ferguson Act was enacted in 1945 to permit the states to continue regulating the insurance business after the Supreme Court declared insurance to be interstate commerce and therefore within Congress's constitutional authority to regulate. The McCarran-Ferguson Act does several important things:

 It explicitly provides for state supremacy in the regulation of the business of insurance.

 It provides insurers with a limited exemption from federal antitrust laws as long as the activity is state regulated.

 It allows insurers to share information that lowers costs of doing business including the development of insurance forms and the sharing of loss data to help with policy pricing.

PLEASE ACT NOW It is very important for legislators to contact Senate Judiciary Committee members from their state regarding the need for NCOIL participation at this hearing. Please contact NCOIL staff at your earliest convenience at (518) 687-0178 if you will be able to do so. Attached is a list of all members on the Senate Judiciary Committee.