A letter from 23 state attorneys general raised the question of whether the insurance industry engages in antitrust behavior. The letter states in part:
We, the undersigned attorneys general, are concerned about the legality of your commitments to work with other insurers and asset owners to advance an activist climate agenda. These actions have led to serious harmful effects on the residents of our states. The push to force insurance companies and their customers to quickly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board, resulting in record inflation and economic hardship for the residents of our states. These economic effects are well known and important. However, this letter will focus on our legal concerns related to your actions.
All of you are members of the Net-Zero Insurance Alliance (NZIA) and some of you are also members of the Net-Zero Asset Owner Alliance (NZAOA), each of which is a UN convened group working to implement the Paris Agreement̵
7;s climate change goals through the financial system, including the insurance industry.1 NZIA brings together “leading insurers and reinsurers representing a significant proportion of the world’s premium volume globally….…
We, the undersigned attorneys general, have serious concerns about whether these many requirements are consistent with federal law, as well as the laws of our states, as they apply to private actors. Under our nation’s antitrust laws and their state counterparts, it is well established that certain arrangements among business competitors are strictly prohibited because they are unfair or unreasonably prejudicial to competition. For example, “an agreement between competitors not to do business with targeted individuals or companies may constitute an illegal boycott, particularly if the group of competitors working together has market power.” Similarly, collective agreements to fix prices or “limit production, sales or production” are illegal. This restriction extends to agreements between competitors to issue uniform pricing policies, terms of sale, production quotas or otherwise restrict the identity of their customers if these agreements will ultimately raise prices.
The insurance industry, more than any other, engages in organized behavior. It shares all kinds of information about business practices and pricing and works together to create laws against policyholders that minimize consumer rights. In addition, it controls most of the regulatory agencies that are supposed to regulate the industry.
This letter and investigative actions by the Attorney General appear to be designed more for political gain rather than being in the true interests of policyholders. But it will be interesting to see the response.
Perhaps it will lead to some interest in looking more closely at the insurance industry. For example, I wrote Are property insurance companies subject to antitrust lawsuits through pricing guidelines and boycotts of contractors who properly and legally repair property, and noted:
A trend in the insurance claims industry is to control and manage repairs to buildings and homes after an insured loss. While many companies share price information through Xactimate and have “preferred vendor” programs to control price and extent of loss, some now buy shares in repair companies or receive “rebates” to steer business to them.
Section 1 of the Sherman Act, 15 USC § 1, prohibits ‘[e]much contract, combination by way of trust or otherwise, or conspiracy, to restrain trade or commerce between the several States.’ Insurance companies have various incentives to price fix for lower repair prices and most of us in the property damage industry have seen various patterns of claims settlement that accomplish this. The question is whether these practices violate the antitrust laws.
American insurance lobbyists and claims adjusters can take a closer look at their behavior. But for the most part, I think they simply pay lip service to the federal and state laws, as I noted fourteen years ago in Antitrust Implications for Insurance Organizations Promoting Intercompany Networks:
{Is the PLRB just paying lip service to this country’s antitrust laws? Remember a topic to avoid – “advantages or disadvantages of doing business in certain states?” I wonder if the keynote speaker for this conference, lobbyist and insurance industry legislative strategist, Sam Miller of the Florida Insurance Council, touched on this topic when he presented, “Florida: Hurricane Alley & The Country’s Trendsetter in Response & Recovery.”
During 2007, Where is the antitrust enforcement anyway? I said:
We must demand that our elected officials and regulators ensure that the insurance industry is not allowed to use various non-tax organizations, executive boards and industry associations as conduits to circumvent rules against concerted and anti-competitive conduct.
Maybe something is finally happening in the antitrust arena regarding the insurance industry. But it really seems like this is much more about publicity and politics rather than really digging into the deep collusion prevalent in the industry.
Thought for the day from a friend who is no longer with us
The collaboration between big business, big labor and big government threatens the spirit of small business that makes America great.
— Foster Friess
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