On August 2, 2010, Democrat Senators Pryor, Boxer and Rockefeller introduced Senate Bill 3685, the Insurance Competition and Transparency Act of 2010. The bill would amend Section 6 of the Federal Trade Commission Act, 15 U.S.C. 46, "to provide the Federal Trade Commission with oversight authority over insurance issuers." Section 6 of the FTC Act currently authorizes the FTC to conduct investigations, make public disclosures and report to Congress about the information obtained in its investigations. The last paragraph of Section 6, however, renders the section inapplicable to the business of insurance unless an appropriate Congressional committee authorizes the Commission to conduct studies and issue reports relating to the business of insurance. This limitation is consistent with the McCarran-Ferguson Act, which renders the entire FTC Act inapplicable to the business of insurance to the extent that business is regulated by state law.
Senate Bill 3685 would amend Section 6 by deleting the last paragraph’s limitation and adding two new paragraphs. The first new paragraph provides that, notwithstanding the McCarran-Ferguson Act, the FTC may use its powers under Section 6 to “conduct studies, prepare reports, and disclose information relating to insurance,” without Congressional approval, regardless of whether the subject of the study, report or information is a for-profit or not-for-profit entity. The second new paragraph provides that, subject to the McCarran Act, both for-profit and not-for-profit insurers are subject to the full FTC Act. (The FTC currently has authority only over for-profit entities. 15 U.S.C §44.)
This new legislation reflects many legislators’ interest in expanding federal participation in the oversight and regulation of the insurance industry, including interest in chipping away at the McCarran-Ferguson Act’s limited antitrust exemption. The actual impact the proposed legislation would have, however, is unclear. Removing the need for Congressional authorization certainly could increase the number of investigations and reports the FTC conducts regarding the industry. The bill does not, however, increase the FTC investigatory or enforcement powers. Because it remains subject to the McCarran-Ferguson Act, the second new paragraph does not increase the FTC’s authority other than by subjecting not-for-profit insurers to the Commission’s ability to police insurers’ activities that do not constitute “the business of insurance.” We will monitor Senate Bill 3685’s progress and provide updates as necessary.