As examples of the “real world” benefits that a repeal of McCarran-Ferguson would bring, Mr. McCracken argues that insurers “would have to write their own forms.” Would consumers and businesses really be served by having to comb over a multitude of contrasting policy forms? The task of comparing products, determining what was actually being purchased, and testing provisions in court would become infinitely more complicated.

He continues that insurers “would have to gather their own statistics.” Few if any companies could compile credible loss histories relying solely on their own experience. Ironically, this “anti-monopoly” approach might reduce competition in the market.

The prolonged soft market demonstrated that McCarran-Ferguson does not shield insurers from the law of supply and demand. If anything, it is the industry's exposure to economic forces that creates frustration among buyers.

Competition is still decisive. The better a company is at writing coverage that reflects the risk profile of its clients, rather than macroeconomic conditions, the fewer surprises it will spring on them over the years. The result will be a more loyal, less price-conscious customer base.

Joseph S. Harrington, CPCU
Manager, Communications
American Association Of Insurance Services
Wheaton, Ill.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.