Federal lawmakers have filed two bills (S. 618 and H.R. 1081 ) calling for the repeal of long existing antitrust exemptions given to the insurance industry by the McCarran-Ferguson Act.  (For details on how this exemption came to be see, Government Accountability Office, Legal Principles Defining the Scope of the Federal Antitrust Exemption for Insurance, Report B-304474 (March 2005) ) However, it seems pointless to talk about repealing this exemption, in light of the fact that antitrust rules which insurance companies are not exempt from are rarely investigated, much less prosecuted.

To add insult to the non-enforcement injury, it appears that the people charged with the responsibility of monitoring this industry are more interested in serving their own interests and cozying up with special interest groups to the detriment of their constituents. Let’s take the Florida Insurance Council as an example, this organization coordinates and plans concerted activities and lobbying efforts in Florida. I noticed that a gentlemanly long time adversary, and no friend to the insurance consumer, George Grawe, was elected as the Director of the Florida Insurance Council. 

Grawe is a lawyer whose career I have watched as he climbed the ranks at Allstate; working as an in-house lawyer, helping to develop Allstate’s in-house litigation departments, re-designing developing certain aspects of their core claim process, and transitioning into governmental affairs. It was in governmental affairs where Grawe exerted significant lobbying and political influence for Allstate’s pecuniary interests in Florida. He, and other insurance industry lobbyists, flood the halls of virtually every state legislature seeking favorable laws for entities that cannot even vote. They have been working overtime in Florida.  Now, he heads FIC, where his primary responsibility is not to just watch out for Allstate, but to help all of Allstate’s competitors as well.  All one needs to do is look at the 2007 FIC Annual Convention Agenda to see how much influence this organization, like so many others like it, wields with those allegedly regulating insurance companies and those making laws allegedly protecting the public.

The people elected and appointed to serve you and to protect you from unfair rates and unscrupulous insurance practices cozily went to this insurance meeting. They include the following:  Senator Bill Posey, Chairman of Banking and Insurance Committee, Representative Don Brown, Chair, House Insurance Committee, Ray Spudeck- Senior Research Economist, Florida Office of Insurance Regulation, David Foy – Chief of Staff, Florida Office of Insurance Regulation, just to name a few.

Now the insurance industry and the public servants attending this affair would like to spin this as an opportunity for those involved to share their viewpoints and get to know one another better so that insurance works efficiently in our Sunshine State. The FBI supposedly watches out for our interests as well, but one could imagine the public outcry if they attended, as invitees and esteemed guests, an organized convention of those they investigate. A bigger question is whether there is any concern by Grawe and the other insurance industry lawyers, executives, and lobbyists as to whether their concerted actions and planning may run contrary to various anti-trust laws.

The insurance industry has long been aware of their potential for monopolistic and anti-competitive behavior. For example, Allstate, whom Grawe still works for while he is coordinating and planning "common interests" with Allstate’s competitors, states in its Claim Policy, Practices, & Procedures Manual that: "Allstate managers must avoid participating in any meeting or discussion of any kind relating to any proposed or concerted action involving prices paid by insurers…." Included in the non-exhaustive list of examples of prohibited discussions is "action with respect to claim handling activities or procedures, whether to negotiate or settle a claim, whether to patronize or not patronize specific contractors," etc…..

As an advocate for policyholders, I understand that my constituency has a lot of other day to day matters on their mind. Their work is not to be watchdogs over insurance companies. However, they pay a lot of tax dollars so that others with expertise in these matters will ensure that insurance companies play fairly, by the rules, and without being catered to by the ones who are watching over them. It is hard for my constituency to believe that there is no conflict of interest when the people we pay to oversee an industry, the watchdogs, are "best friends" and cozily socializing with those supposedly being watched.

George Grawe and his industry colleagues are very smart by living the maxim, "keep your friends close, and your enemies closer." If there is a concern that laws are not being followed or are being wrongly manipulated, there should be honest and thorough investigation to ensure governmental integrity. Attorneys Generals, legislators, and Departments of Insurance typically are charged with performing these investigations. I am certain that there are those in government that share this belief and even do something about it. (See Sen. Trent Lott, Re. Gene Taylor, Gov. Charlie Crist, A.G. Eliot Spitzer, Sen. Jeff Atwater and even FL Insurance Consumer Advocate Bob Milligan.) 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.