GRAPEVINE, TEXAS--Repealing the insurance industry's limited anti-trust exemption would actually cause more harm than good for consumers, according to a study announced today.

The analysis, conducted by Lawrence Powell, a professor at the University of Arkansas in Little Rock, was released at the National Association of Mutual Insurance Companies annual convention here.

Mr. Powell's findings were as much an exercise in helping to define the exemption as advocating for it to be maintained.

"We wanted to speak to the appropriateness" of the McCarran-Ferguson Act of 1945 giving states the power to regulate insurance and permitting multiple carriers use of risk information, he explained, characterizing the analysis as "an attempt to say what McCarran doesn't do and what it does."

Mr. Powell's analysis found that insurance markets are generally competitive, but would become less so in the event the McCarran-Ferguson exemption was repealed.

"Without it, prices would go up and availability would go down," he said, as smaller companies without the resources to gauge risk and set prices are unable to compete.

Additionally, other efforts made by multiple insurers acting together could be affected, he noted, such as multiple insurers combining to provide coverage for large risks or even state residual markets or guaranty funds.

While the McCarran-Ferguson exemption is an important tool for the insurance industry, Mr. Powell said there are areas in which the market could be improved. However, he said it should be done via regulation, and should focus on increasing competition and "allowing market forces to work." A key aspect of this, he said, would be to allow for greater underwriting and ratemaking freedom for insurers.

Much of the discussion about repealing the exemption has surfaced in the aftermath of Hurricane Katrina, according to Robert Detlefsen, vice president of public policy for NAMIC.

Mr. Powell said there are always problems related to losses, but in response lawmakers and others generally impose conditions on underwriting and ratemaking. "Why not address losses?" he asked, noting that measures such as building codes or other mitigation actions could be implemented.

It is possible that industry practices could continue in the absence of the exemption, he acknowledged, since practices that do not harm consumers are not considered anti-trust violations.

However, he said, doing so would involve going through major legal tests of every action, which would carry "huge legal costs" for insurers. Additionally, he noted, removing the exemption would open the door to private actions."

"We've already got McCarran," he said, "and we've had it for 62 years."

Mr. Detlefsen said that Mr. Powell's analysis had its genesis at a NAMIC public policy conference held earlier this year where members decided which subject they would like to see examined. The McCarran-Ferguson issue, he said, "was very salient at the time, and I think it continues to be."

Mr. Detlefsen said NAMIC considered a number of options when deciding how the study should be conducted and by whom. While any number of experts from organizations and "think tanks" were available, he said NAMIC wanted to ensure the analysis was conducted by someone independent from the industry but with the expertise needed to give the analysis credibility.

"We wanted a university scholar who specializes in insurance," he said. NAMIC examined Mr. Powell's earlier publications, he said, and spoke with insurance professionals who were familiar with his work. "All the stars kind of aligned for us," he said.