Friday, January 29, 2010

Watch for Rising Premiums

Huliq is reporting that the game for insurers may be about to change dramatically. The McCrarran-Ferguson Act gave insurer's immunity against anti-trust regulation.

The threat of ending this protection has been thrown about by politicians with an ax to grind and picked up by some in the media as proof positive there is collusion among carriers to artificially keep premiums high.


It is no secret that there is a monopoly on health insurance. Google health insurance and one is likely to come with Blue Cross or Aetna.

And the point is?

Those with liberal arts degrees and small sex organs claim this is proof of a price fixing monopoly. Fact is, if they had any business acumen at all they would say just the opposite. As we have stated ad infinitum, market domination by one or a handful of carriers in a given market is proof that competitive market forces are in play.

Antitrust exemption does indeed allow carriers to share information but it has nothing to do with price fixing. The kind of data that is "shared" are things that relate to loss information and risk management.

They do not get together in smoke filled rooms and plot price increases.

If Congress succeeds in repealing McCrarran-Ferguson you can expect premiums to rise for virtually all lines of coverage, not just health insurance.

Think that one over while listening to NPR.
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