To modify the antitrust exemption applicable to the business of insurance.

May 17, 2005

Mr. DEFAZIO (for himself, Mr. BAIRD, Mrs. CHRISTENSEN, Mr. CROWLEY, Mr. HINCHEY, and Mr. TAYLOR of Mississippi) introduced the following bill; which was referred to the Committee on the Judiciary

To modify the antitrust exemption applicable to the business of insurance.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Insurance Competitive Pricing Act of 2005'.

SEC. 2. AMENDMENTS.

Section 2 of the Act of March 9, 1945 (59 Stat. 34; 15 U.S.C. 1012), commonly known as the McCarran-Ferguson Act, is amended--

(1) in subsection (b)--

(A) by striking `: Provided, That after June 30, 1948,' and inserting `, except that',

(B) by inserting `section 5 of' after `Clayton Act, and',

(C) by inserting `as such section 5 relates to monopolies, attempts to monopolize, and unlawful restraints of trade,' after `Commission Act, as amended,', and

(D) by striking `that such business' and all that follows through `law.' and inserting the following:

`that--

`(1) such business is not regulated by State law; or

`(2) the conduct of a person engaged in such business involves--

`(A) price fixing;

`(B) allocating with a competitor a geographical area in which, or persons to whom, insurance will be offered for sale;

`(C) unlawfully tying the sale or purchase of--

`(i) one type of insurance to the sale or purchase of another type of insurance; or

`(ii) any type of insurance to the sale or purchase of any other service or product; or

`(D) monopolizing, or attempting to monopolize, any part of the business of insurance.', and

(2) by adding at the end the following:

`(c) The conduct referred to in subsection (b)(2) shall not include making a contract, or engaging in a combination or conspiracy--

`(1) to collect, compile, or disseminate historical loss data;

`(2) to determine a loss development factor applicable to historical loss data; or

`(3) to perform actuarial services if such contract, combination, or conspiracy does not involve a restraint of trade.

`(d) The conduct referred to in subsection (b)(2) shall not include making a contract, or engaging in a combination or conspiracy, to determine a trend factor--

`(1) during the transition period; and

`(2) in the case of a person with a policyholders' surplus of less than $10,000,000 or a policyholders' surplus of less than $100,000,000 and whose direct written insurance premiums for the line of business in question constitutes less than a 2.5 percent share of the total market in the most recently ended 1-year period in every jurisdiction in which the person is engaged in the business of insurance and which is not more than 50 percent owned or controlled by another person engaged in the business of insurance and which does not, together with other persons engaging in such conduct have, in the aggregate, in the then most recently completed 1-year period, 20 percent or more of the relevant market in the line of insurance involved.

`(e) For purposes of this section--

`(1) the term `historical loss data' means information respecting claims paid, or reserves held for claims reported, by any person engaged in the business of insurance;

`(2) the term `loss development factor' means an adjustment to be made to reserves held for losses incurred for claims reported by any person engaged in the business of insurance, for the purpose of bringing such reserves to an ultimate paid basis;

`(3) the term `transition period' means--

`(A) the 4-year period beginning on the effective date of the Insurance Competitive Pricing Act of 2005, in the case of a person--

`(i) that wrote insurance having an aggregate amount of annual premiums less than $20,000,000; and

`(ii) not more than 50 percent of which was owned or controlled by another person engaged in the business of insurance;

in the then most recently ended 1-year period; or

`(B) the 2-year period beginning on such effective date, in the case of any person to which subparagraph (A) does not apply; and

`(4) the term `trend factor' means an adjustment to be made to losses incurred for claims reported by any person engaged in the business of insurance, to reflect a change in inflation or any other change in the estimated loss costs incurred by persons engaged in the business of insurance.'.

SEC. 3. EFFECTIVE DATE.

This Act shall take effect 1 year after the date of the enactment of this Act.