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Medical Malpractice Liability Insurance and the McCarran-Ferguson Act

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Publication Date: March 2003

Publisher(s): Library of Congress. Congressional Research Service

Series: RS21461

Topic: Business (Insurance)


Volatility in prices and availability of medical malpractice liability insurance and allegations that insurance companies may have colluded in raising current rates are receiving attention from policymakers. In particular, the 108th Congress is considering the antitrust exemption for the business of insurance provided under the McCarranFerguson Act of 1945. Historically, insurers have relied on the Act's limited exemption from federal antitrust law to engage in cooperative activities that allow them to identify and measure risk, including joint collection, sharing, and analysis of loss cost data, and development of standardized policy forms. Much of the policy debate concerns whether narrowing the exemption from antitrust law would alleviate or aggravate the current problem of high premiums and insurance coverage availability.

On February 11, 2003, Senator Patrick J. Leahy introduced S. 352, the Medical Malpractice Insurance Antitrust Act of 2003, to modify the McCarran-Ferguson Act to ensure that commercial insurers do not engage in anti-competitive rate-making in the medical malpractice insurance market to the detriment of consumers. S. 352 does not address other antitrust laws, but is limited to price-fixing, bid-rigging, and market allocations, and only in connection with the provision of medical malpractice insurance.

This report provides an overview of the current medical malpractice insurance situation and insurance market structure, summarizes the provisions of both S. 352 and the McCarran-Ferguson Act of 1945, and examines arguments for and against modifying the McCarran-Ferguson Act. This report will be updated as developments warrant.