A letter from 23 state attorney generals raised the issue of whether the insurance industry is engaging in antitrust behavior. The letter states in part:

We, the undersigned attorneys general, are concerned with the legality of your commitments to collaborate with other insurers and asset owners in order to advance an activist climate agenda. These actions have led to serious detrimental effects on the residents of our states. The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board, resulting in record-breaking inflation and financial hardships for the residents of our states. These financial effects are well-known and important. This letter, however, will focus on our legal concerns related to your actions.

All of you are members of the Net-Zero Insurance Alliance (NZIA) and some of you also are members of the Net-Zero Asset Owner Alliance (NZAOA), each of which is a UN-convened group working to implement the Paris Agreement’s climate change goals through the financial system, including the insurance industry.1 NZIA brings together “leading insurers and reinsurers representing a significant percentage of the world premium volume globally….

We, the undersigned attorneys general, have serious concerns about whether these numerous requirements square with federal law, as well as the laws of our states, as they apply to private actors. Under our nation’s antitrust laws and their state equivalents, it is well-established that certain arrangements among business competitors are strictly forbidden because they are unfair or unreasonably harmful to competition. For example, ‘an agreement among competitors not to do business with targeted individuals or businesses may be an illegal boycott, especially if the group of competitors working together has market power.’ Likewise, collective agreements to fix prices or ‘restrict production, sales, or output’ are illegal. This restriction extends to agreements among competitors to issue uniform pricing policies, conditions of sale, production quotas, or otherwise limit the identity of their customers if those agreements will ultimately raise prices.

The insurance industry, more than any other, engages in organized behavior. It shares all kinds of information about business practices and pricing and colludes to make anti-policyholder laws that minimize consumer rights. Moreover, it controls most of the regulators that are supposed to regulate the industry. 

This letter and investigative action by the attorney generals seem to be designed more for political gain rather than being in the true interests of policyholders. But it will be interesting to see the response. 

Perhaps it will result in some interest to more thoroughly investigate the insurance industry. For example, I wrote Are Property Insurers Subject to Antitrust Lawsuits Through Pricing Guidelines and Boycotting Contractors That Properly and Legally Repair Property, and noted:

One trend in the insurance claims business is to control and manage the repair of buildings and homes following an insured loss. While many companies share pricing information through Xactimate and have ‘preferred vendor’ programs to control price and scope of loss, some are now purchasing interests in repair companies or obtain ‘rebates’ for steering business to them.

Section 1 of the Sherman Act, 15 U.S.C. § 1, prohibits ‘[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.’ Insurance companies have various incentives to price fix for lower repair prices and most of us in the property claims business have witnessed various patterns of claims practices that accomplish this. The question is whether those practices violate antitrust laws.

American insurance lobbyists and claims managers may take a closer look at their behaviors. But, most of the time, I think they simply pay lip service to the federal and state laws, as I noted fourteen years ago in Antitrust Implications for Insurance Trade Organizations that Promote Inter-Company Networking:

{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.’

In 2007, Where is the Antitrust Enforcement Anyway? I stated: 

We must demand that our elected officials and regulators make certain that the insurance industry is not permitted to use various non-rate organizations, executive councils, and trade associations as conduits to circumvent rules against concerted and anti-competitive behavior.

Maybe something will finally happen in the antitrust arena regarding the insurance industry. But it sure seems that this is a lot more about publicity and politics rather than really digging into the deep collusion that is prevalent in the industry. 

Thought For The Day From A Friend Who Is No Longer With Us 

The collusion of big business, big labor, and big government threaten the spirit of small business that makes America great.

—Foster Friess