Congress appears to be taking steps to block health insurers from pooling loss data - and the industry fears this could open a Pandora’s Box that would lead to a broader removal of the privilege for all insurers in the future.
The Competitive Health Insurance Reform Act (HR 372), which repeals a 65-year-old antitrust exemption that allows all insurers to share loss data, was put to a vote on March 22 in the Lower House.
Bloomberg explained in a report that the pooling of data is important, especially for small insurers that do not have extensive databases that larger insurers have. The data is used to determine actuarial rates that reflect the risk attached to coverage offered by insurers, which helps them accurately assess exposures and price premiums.
Proponents of the bill say that the proposal is intended to increase competition in the health underwriting market.
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“Passage of HR 372 could lead to a slippery slope for non-health lines of insurance such as property and casualty insurance, and life insurance,” Robert Rusbult, president and chief executive of the Insurance Agents and Brokers of America, was quoted as saying in a statement.
Rusbult further explained that if the bill is passed into law, legislators could further apply it to the broader insurance industry.
“One of the main benefits of the exemption is that it allows insurers to share information on insurance losses so that the insurance industry can better project future losses and charged actuarially based prices for their products,” the statement also said.
Additionally, the Property Casualty Insurers Association of America said in a February testimony that, “(anticompetitive) price fixing, bid rigging, and market allocations are generally illegal under state anti-trust laws.”
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Bloomberg report noted that measures are already in place to preclude anti-competitive practices in the industry in each of the states.
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