The House Judiciary Committee is in the midst of hearings inquiring about the low quality of competition in the insurance industry. Forty years ago this powerful industry rushed through Congress a law called the McCarran-Ferguson Act, without any public hearings, to exempt the insurance industry from the federal antitrust laws except for actions of industry coercion and boycott. This law left the job for the state and their record has been dismal. Now the Committee wants to take another look.
There is a sense here of deja vu. Eleven years ago I delivered testimony before a Senate Judiciary Subcommittee conducting a similar hearing. The then Chairman, Senator Philip Hart (D-Mich.), was seeking to pass a life insurance disclosure bill so consumers could compare the different policies they were being asked to purchase. I summarized my lengthy presentation by describing industry as “a smug sacred cow feeding the public a steady line of sacred bull.” This most untouchable group of underwriters emerged the victor over Senator Hart whose bill went nowhere.
Can Chairman Peter Rodino’s House Committee have any more success? Not if the media continue to ignore reporting about testimony by specialists who point to billions of dollars a year lost to consumers due to the lack of both information and genuine competition.
In 1979 the General Accounting Office (GAO) of Congress sharply criticized state insurance regulators for not assembling comparative information b: company name for consumers on claims-handling procedures, complaint records, and price differences. The GA0 also urged that state regulators “provide checklists of coverages so that consumers could at least make some comparison of what is being offered by competing policies.”
The GAO report was like water off the duck’s back. Nothing happened. The National Association of Insurance Commissioners (NAIC), the organization of state regulators, has been debating life insurance disclosure for decades to no workable conclusion. NAIC cannot make up its mind even on the question of telling consumers what rate of return they receive on the savings part of their whole life policies. Just go to an annual convention of the NAIC, where insurance industry hospitality suites abound, and you’ll get the idea of who surrounds and massages these so-called regulators.
Is it any wonder that millions of people are misled into buying the wrong insurance policies for their families, as demonstrated in studies conducted within the Federal Trade Commission (FTC) and by the brilliant Indiana. University Insurance Professor, Joseph Belth. Former Federal Insurance Commissioner, Robert Hunter, has shown how such “junk coverages” as credit life Insurance, medi-gap scams, cancer insurance and many other offerings relieve innocent Americans of billions of dollars yearly. (For more details, send a stamped, self-addressed envelope to the National Insurance Consumer Organization, 344 Commerce Street, Alexandria, Virginia, 22314.)
President Jimmy Carter was so moved by the findings of the FTC report that in 1979 he sent a letter to all governors suggesting that they require disclosure on rates of return, citing “billions of dollars a year in unnecessary costs to consumers.” No state has done so. Appalling, Congress responded to powerful insurance lobbyists by forbidding the FTC from even studying the insurance industry again without prior Congressional approval.
If you have complaints about insurance companies, send them to your Senator and Representative with a copy to Cong. Peter Rodino, Chairman, House Judiciary Committee, House of Representatives, Washington, D.C. 20515. That is the place to start the drive to make your insurance premiums, in the custody of Insurance companies, more responsive to your needs.