In the United States, the McCarran Ferguson Act (15 USC
1011-1015), enacted by Congress in 1945, provides the insurance industry with a
limited exemption from the federal antitrust laws. The Act applies to all
conduct that constitutes “the business of insurance,” provided that the conduct
is “regulated by state law” and is not an act of “boycott, coercion or
intimidation.” While the Act has been the subject of controversy over the
years, and calls for its repeal have been frequent, including most recently
during the debate that ultimately led to the enactment of the Affordable Care
Act, the Act remains in place and provides a significant defense to potential
antitrust liability for a whole range of insurer activity.
In Europe, the insurance industry also enjoys a limited
exemption from the E.U. competition laws (specifically Article 101), by virtue
of the “Insurance Block Exemption.” This exemption currently shields insurers
from liability when they engage in (1) an exchange of information considered
reasonably necessary for calculating insurance risk, including the exchange of
joint compilations, joint tables and studies; and (2) the creation of
co-insurance and co-reinsurance pools, provided that the market share of the
pool does not exceed a certain level.
However, unlike in the U.S., the Block Exemption must be
renewed every seven years for it to remain in place. Last renewed in 2010, the
European Commission is now beginning its review of the exemption to assess
whether it should be renewed in 2017. And, as the process in 2010 confirms,
renewal is not guaranteed, as the Commission, over insurer objections, chose at
that time to eliminate a provision in an earlier version of the Block Exemption
that permitted insurers to implement “standard policy conditions” in their
policies, finding that an exemption for this activity was not necessary to the proper
functioning of insurance markets.
In connection with its review of the Block Exemption, in
early August the Commission issued a notice inviting insurers to offer their
comments on the continuing need for the exemption. Submissions can be made
until November 4, and the Commission will ultimately submit a report to the
European Parliament with its recommendation concerning the exemption in early
2016. Stay tuned.