I 

109TH CONGRESS 

1ST SESSION H. R. 2401

To modify the antitrust exemption applicable to the business of insurance. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 17, 2005

Mr. DEFAZIO (for himself, Mr. BAIRD, Mrs. CHRISTENSEN, Mr. CROWLEY, 

Mr. HINCHEY, and Mr. TAYLOR of Mississippi) introduced the following 

bill; which was referred to the Committee on the Judiciary 

A BILL

To modify the antitrust exemption applicable to the business 

of insurance.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Insurance Competitive 

5 Pricing Act of 2005’’. 

6 SEC. 2. AMENDMENTS. 

7 Section 2 of the Act of March 9, 1945 (59 Stat. 34; 

8 15 U.S.C. 1012), commonly known as the McCarran-Fer9 guson Act, is amended—

10 (1) in subsection (b)—
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1 (A) by striking ‘‘: Provided, That after 

2 June 30, 1948,’’ and inserting ‘‘, except that’’, 

3 (B) by inserting ‘‘section 5 of’’ after 

4 ‘‘Clayton Act, and’’, 

5 (C) by inserting ‘‘as such section 5 relates 

6 to monopolies, attempts to monopolize, and un7 lawful restraints of trade,’’ after ‘‘Commission 

8 Act, as amended,’’, and 

9 (D) by striking ‘‘that such business’’ and 

10 all that follows through ‘‘law.’’ and inserting 

11 the following: 

12 ‘‘that—

13 ‘‘(1) such business is not regulated by State 

14 law; or 

15 ‘‘(2) the conduct of a person engaged in such 

16 business involves—

17 ‘‘(A) price fixing; 

18 ‘‘(B) allocating with a competitor a geo19 graphical area in which, or persons to whom, 

20 insurance will be offered for sale; 

21 ‘‘(C) unlawfully tying the sale or purchase 

22 of—

23 ‘‘(i) one type of insurance to the sale 

24 or purchase of another type of insurance; 

25 or 
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1 ‘‘(ii) any type of insurance to the sale 

2 or purchase of any other service or prod3 uct; or 

4 ‘‘(D) monopolizing, or attempting to mo5 nopolize, any part of the business of insur6 ance.’’, and 

7 (2) by adding at the end the following: 

8 ‘‘(c) The conduct referred to in subsection (b)(2) 

9 shall not include making a contract, or engaging in a com10 bination or conspiracy—

11 ‘‘(1) to collect, compile, or disseminate histor12 ical loss data; 

13 ‘‘(2) to determine a loss development factor ap14 plicable to historical loss data; or 

15 ‘‘(3) to perform actuarial services if such con16 tract, combination, or conspiracy does not involve a 

17 restraint of trade. 

18 ‘‘(d) The conduct referred to in subsection (b)(2) 

19 shall not include making a contract, or engaging in a com20 bination or conspiracy, to determine a trend factor—

21 ‘‘(1) during the transition period; and 

22 ‘‘(2) in the case of a person with a policy23 holders’ surplus of less than $10,000,000 or a pol24 icyholders’ surplus of less than $100,000,000 and 

25 whose direct written insurance premiums for the line 
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1 of business in question constitutes less than a 2.5 

2 percent share of the total market in the most re3 cently ended 1-year period in every jurisdiction in 

4 which the person is engaged in the business of insur5 ance and which is not more than 50 percent owned 

6 or controlled by another person engaged in the busi7 ness of insurance and which does not, together with 

8 other persons engaging in such conduct have, in the 

9 aggregate, in the then most recently completed 1-

10 year period, 20 percent or more of the relevant mar11 ket in the line of insurance involved. 

12 ‘‘(e) For purposes of this section—

13 ‘‘(1) the term ‘historical loss data’ means infor14 mation respecting claims paid, or reserves held for 

15 claims reported, by any person engaged in the busi16 ness of insurance; 

17 ‘‘(2) the term ‘loss development factor’ means 

18 an adjustment to be made to reserves held for losses 

19 incurred for claims reported by any person engaged 

20 in the business of insurance, for the purpose of 

21 bringing such reserves to an ultimate paid basis; 

22 ‘‘(3) the term ‘transition period’ means—

23 ‘‘(A) the 4-year period beginning on the ef24 fective date of the Insurance Competitive Pric25 ing Act of 2005, in the case of a person—
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1 ‘‘(i) that wrote insurance having an 

2 aggregate amount of annual premiums less 

3 than $20,000,000; and 

4 ‘‘(ii) not more than 50 percent of 

5 which was owned or controlled by another 

6 person engaged in the business of insur7 ance; 

8 in the then most recently ended 1-year period; 

9 or 

10 ‘‘(B) the 2-year period beginning on such 

11 effective date, in the case of any person to 

12 which subparagraph (A) does not apply; and 

13 ‘‘(4) the term ‘trend factor’ means an adjust14 ment to be made to losses incurred for claims re15 ported by any person engaged in the business of in16 surance, to reflect a change in inflation or any other 

17 change in the estimated loss costs incurred by per18 sons engaged in the business of insurance.’’. 

19 SEC. 3. EFFECTIVE DATE. 

20 This Act shall take effect 1 year after the date of 

21 the enactment of this Act.

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