I would appreciate it if you will have both of these entered in the hearing record on Senate bill 1184. Sincerely yours, TOM MCINTYRE, U.S. Senator. MAY 28, 1963. Hon. ALBERT F. JORDAN, Superintendent of Insurance, District of Columbia, DEAR MR. JORDAN: On March 25, 1963. I introduced in the Senate S. 1184, to repeal the present fire insurance rate law in the District of Columbia, and to bring fire insurance rates under the provisions of the existing District of Columbia casualty insurance rate law. As you know, this bill differs substantially from the earlier bills which both I and Senator O'Mahoney introduced for the regulation of fire insurance in the District. Because of the substantial opposition from important segments of the industry to these oriignal proposals. I decided that in the interest of obtaining urgently needed reforms in the fire rate law, I would support a measure very similar to the bill introduced last year by Senator Bible and which was supported by you. However, the bill introduced this year contained a number of amend ments which I felt were needed in order to provide a workable framework for rate regulation in the public interest. The Subcommittee on Business and Commerce of the Senate Committee on the District of Columbia has very kindly furnished me a copy of the letter of May 9, 1963, from the President of the Board of Commissioners for the District of Columbia. This letter concludes that the Commissioners and the Superintendent of Insurance believe that S. 1184, together with certain amendments proposed in this letter, represents a desirable revision of the insurance laws of the District of Columbia. I want to take this opportunity to express my sincere appreciation for your genuine efforts to obtain much-needed revision of the fire rate law in the District. The letter from the Board of Commissioners, expressing your views, is a statesmanlike effort to resolve the conflicting attitudes toward the problem of rate regulation. You have proposed a number of amendments which would remove several important provisions in S. 1184, and, in addition, which would introduce some important new matters. I would have preferred to see the Congress enact this legislation in the manner in which I proposed on the 25th of March of this year. However, I feel that if we are to make progress this year in obtaining needed reforms, it is important that a constructive effort be made on the part of all parties advocating a revision to compose their differences and to join hands in a common effort. Therefore, I am willing to accept the amendments proposed in your letter of May 9, and will urge the Committee on the District of Columbia to approve S. 1184 with the amendments recommended by you and the Board of Commissioners. As you are aware, I proposed certain amendments to the law in order to assure that there would be no more onerous administrative requirements for deviations than for Bureau rate filings or independent filings. On pages 5 and 6 of your statement of May 9, there is an amendment providing for authority to disapprove deviations retroactively for a period of 30 days. I trust that in submitting your explanatory statement to the Committee on the District of Columbia, you will have an opportunity to elaborate further upon this provision. In your testimony before the subcommittee last year you indicated your desire for additional authority to curb certain types of deviations which you felt amounted to "flash filings." It was my understanding from your testimony that your concern was directed solely at possible attempts by some insurers to obtain a particular large industrial or commercial risk by slashing the rates. Therefore, I assume that your desire in this amendment to obtain retroactive disapproval power in the case of such deviations is directed solely at this type of situation. In order that the legislative history may be clear on this point, I would urge you to include a description of the purposes of this provision in your statement. I shall submit a copy of this letter to the Committee on the District of Columbia and ask that it be included in the hearings and the printed record of this Again, may I extend my congratulations to you for the very reasonable and conciliatory spirit you have shown in this matter. I am sure that Senator Morse, who has vigorously supported this legislation, will join with me in commending you on your efforts to discharge your public responsibilities. Sincerely, ESTES KEFAUVER, U.S. Senator. REGULATION OF FIRE AND CASUALTY INSURANCE RATES IN THE DISTRICT OF COLUMBIA Mr. KEFAUVER. Mr. President, on December 1, 1962, Joseph C. O'Mahoney, a beloved and revered Member of this body for almost 30 years, died at the Naval Hospital at Bethesda, Md., at the age of 78. As the last act of Senator O'Mahoney's distinguished legislative career, he introduced in the Senate a bill to regulate fire and casualty insurance rates in the District of Columbia, in a manner consistent with his deep and abiding lifetime belief in competition as the guiding force in our free enterprise system. Along with many other distinguished Members of this body, Senator O'Mahoney applauded the Supreme Court decision in the South-Eastern Underwriters case in 1945, which applied the Sherman Antitrust Act to certain monopolistic and anticompetitive practices in the fire insurance field. Senator O'Mahoney was instrumental in the enactment of the McCarran-Ferguson Act of 1945, which continued the application of the Federal antitrust laws to the business of insurance to the extent that such business was not regulated by State law. Under his direction, the Antitrust and Monopoly Subcommittee conducted a 3-year study to examine the adequacy of State regulation and to measure the vitality of the insurance industry under the McCarran Act. I welcomed the opportunity to participate actively in these hearings, and joined with Senator O'Mahoney and the other members of the Judiciary Committee in Report No. 831, 87th Congress, filed in the Senate August 1961. The bill which Senator O'Mahoney introduced in the Senate on August 29, 1960, and which I reintroduced on January 23, 1961, reflected the views of the Judiciary Committee as contained in its report. Along with Senator O'Mahoney, I was appalled to learn during the course of this study that certain of the monopoliste practices which the Supreme Court had condemned in the South-Eastern Underwriters case were actually sanctioned by the fire insurance rate law for the District of Columbia. This law had been enacted a few days prior to this decision, and Congress has never seen fit to amend it. I refer to the requirement in the District of Columbia fire rate law that compels all insurers to belong to the rating bureau. This forces companies to join a price-fixing combination and denies them the right of independence, even though membership in a rating bureau may be completely anathema to the philosophy and to the traditions of such companies. As the Judiciary Committee noted: "There can be no doubt that coercion in insurance is the antithesis of the congressional purpose in enacting Public Law 15." Laws which require membership in rating bureaus, or which eliminate all rate competition are in direct conflict with the McCarran Act. In the course of this Antitrust Committee's insurance study, we learned that the casualty insurance rate law for the District of Columbia enacted in 1948 did not contain either this restrictive feature or other tight controls over rates which were in the early fire rate law. My essential purpose in introducing this bill today is to repeal the fire rate law and to apply the salutary principles of the casualty law to both fire and casualty insurance rates. The original bills which Senator O'Mahoney and I introduced met with considerable opposition from certain groups in the insurance industry, primarily under the belief that they were designed as model bills upon which the States would be required to pattern their rate laws. This was not our intention, and is not now my purpose. I concur in the remarks of Senator Morse, who cosponsored this bill with me, when he stated during the hearings before the District of Columbia Committee that the bill is intended to be a model of good legislation for the District of Columbia, and not as any congressional mandate that the States are obligated to follow. The National Association of Insurance Commissioners has frequently encouraged the development of all-industry bills which have served as models. However, the Congress possesses no authority to establish model laws which the 21-993-63 3 REVISION OF DISTRICT OF COLUMBIA LAWS ON RATE REGULATIONS IN FIRE AND CASUALTY INSURANCE INDUSTRIES COMMITTEE ON THE DISTRICT OF COLUMBIA UNITED STATES SENATE EIGHTY-EIGHTH CONGRESS FIRST SESSION ON S. 1184: 1 TO AMEND AND CONSOLIDATE THE LAWS PROVIDING FOR |