Those curious about why the insurance industry has such astounding power over Congress should begin by understanding the history of regulation of this industry. The usual power relationship between elected officials and private industries centers around one relationship: industry input on regulatory and/or taxation matters in return for campaign contributions. In all such relationships, no modern industry has been as successful as the insurance industry in keeping Congress from playing any significant role in its regulation. That success began with the McCarran-Ferguson Act of 1945. The story begins with antitrust. In 1944, Attorney-General Francis Biddle, appointed by FDR, brought a case against the South-Eastern Underwriters Association under the Sherman Antitrust Act. The government accused the insurance alliance, among other things, of price fixing. That case,United States vs. South-Eastern Underwriters, was decided in favor of the government by the Supreme Court in 1945. The underwriters alliance made an amazing argument: Sustaining the demurrer, the District Court held that the business of insurance is not commerce, either intrastate or interstate; it is not interstate commerce or interstate trade, though it might be considered a trade subject to local laws either State or Federal, where the commerce clause is not the authority relied upon.
Posted on: Mon, 02 Dec 2013 11:21:31 +0000
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