Lately, there has been quite a bit of discussion about insurance industry immunity under the antitrust laws. The most recent discussion has been about health insurance. I have mentioned it somewhat in a past post, Where is the Antitrust Enforcement Anyway?
So, I found it quite fascinating to notice the Antitrust Statement issued by the Property Loss Research Bureau (PLRB) and the Liability Insurance Research Bureau (LIRB) at their Large Loss Conference this week. The statement provided in part:
Presenters and attendees at the LARGE LOSS CONFERENCE must remember that their respective firms are competitors in the marketplace and the McCarran-Ferguson Act and the laws of some states provide the insurance industry with only a very limited immunity from federal and state antitrust scrutiny. Therefore, the presenters and attendees must exercise care during all presentations and discussions, since even the most innocuous discussions of certain topics might later be misinterpreted as evidence of collusion.
There are a number of important aspects to this statement. First, adjusters at conferences must appreciate that their colleagues from other businesses are competitors in the marketplace. Second, since they are competitors, antitrust laws apply to them. Third, the antitrust exemptions and immunities granted to insurance companies are very limited.
One impression I have of the public policy to allow antitrust exemptions is to provide for sharing of loss history and common form coverages to help regulators make certain that insurance companies would not charge too little and risk financial ruin in an attempt to gain market share. Insurance companies going broke and not paying claims after widespread disaster is never good for the public.
Nevertheless, the Antitrust Statement issued by these entities to the claims executives and adjusters attending this conference correctly warned that collusion can (and normally does) take place and of the specific subjects of discussion which should be avoided between adjusters working for different companies:
At the LARGE LOSS CONFERENCENCE, and all educational, social, and business development events connected with this meeting, there should be no discussion or agreement, formal or informal, express or implied, as to any matters which might give rise to an allegation of antitrust laws. Subjects to avoid include:
*marketing strategies;marketing responses to legislative, regulatory, or other developments;
*prices or costs of any products or services offered for sale by insurers or purchased by insurers;
*individual insurance company positions on coverage issues and other matters of insurance policy interpretation; agreements or understandings relating to claim practices, policies, or positions;
*standards by which the performance of any insurer could or should be judged; codes of ethics;
*advantages or disadvantages of doing business in particular states;
*refusal to deal with, or boycott of, potential insureds or suppliers of products or services; use of particular suppliers of products or services; and
*costs or profits of any aspect of any of the above.
I am no expert on antitrust laws. When I first read this, I thought, “what the heck can we talk and learn about from our peers and colleagues if we cannot talk about any of this?” Given this extensive list, I suppose you could talk with your colleagues only about the weather or the Yankees winning the World Series at the networking functions.
The PLRB in particular has excellent materials and information regarding coverage and adjusting issues. I encourage my colleagues in the insurance industry to attend so they can do a better job learning the policy coverages and how to adjust and apply the insurance product. While the PLRB presents one-sided views because it prevents policyholder representatives from attending PLRB conferences, it still has very valuable educational information for claims managers and adjusters.
For example, some of the educational sessions involved Chinese Drywall, Complexities in Adjusting and Measuring Builders Risk Losses with Delay, and First-Party Cyber Losses. These are all very important adjusting topics that adjusters need to learn how to approach and then get monies to their customers suffering from these calamities.
Yet, if the purpose of the PLRB is to educate adjusters to do a better job, and if the adjusters are supposed to be concerned with promptly paying the full amount of benefits to policyholders, why are the PLRB proceedings and educational topics a secret only for the insurance industry? The PLRB claims that antitrust laws are supposed to be obeyed, but the educational information concerning how the products of the insurance industry work is withheld from the customers of these PLRB insurers.
Why would the insurance industry want to keep secrets from its customers about how the customers can expect to be treated if they have a claim? From the consumer’s skeptical viewpoint, some may question if the motive is to prevent the insurance product form paying as much as it should. The PLRB and all exclusive insurance industry organizations discussing how their products perform should have their leaders and legal counsel determine whether the secrecy is in violation of law and is to help promote a collusive impact to pay consumers less than what is owed. Otherwise, why have the secrecy? Are insurance claims executives afraid that their customers may learn they are not paying all that is owed? In a scenario where the competitors meet together and can learn from each other, but exclude the parties to the other side of the deal, many should question what is really going on and the reason for the policy of exclusion.
As readers noted in my recent post, Safeco and Liberty Mutual Claims Practices Questioned on a National Basis: Policyholders Organize Against Wrongful Claims Practices, where I informed others of our consumer networking activities regarding Safeco’s and Liberty Mutual’s claims handling processes and cases, the customers of Safeco and Liberty Mutual would want to know how certain aspects of their property insurance claims may be handled. The PLRB had a seminar, “Ordinance or Law: A Review of the Additional Coverage” that was taught in part by Fritz Lander and Jamie Minich—large loss quality assurance specialists from Liberty Mutual. Many Safeco and Liberty Mutual policyholders with disputes on these issues may wonder what its claims quality assurance specialists say behind closed doors to insurance insiders versus what their hired attorneys argue in open court.
Is the PLRB just paying lip service to the antitrust laws of this country? Remember a topic to be avoided–“advantages or disadvantages of doing business in particular states?” I wonder if the keynote speaker to this conference, lobbyist and insurance industry legislative strategist, Sam Miller of the Florida Insurance Council, touched on this topic when he presented, “Florida: Hurricane Alley & The Country’s Trendsetter in Response & Recovery.”