Four major Texas insurance companies were being held liable for violating anti-trust laws according to the article “Four Big Insurers Settle Texas Antitrust Case”. The insurers in question included ITT Hartford, Aetna, Liberty Mutual Insurance, and the Insurance Company of North America. They were being challenged for allegedly conspiring together to write general liability policies for business which reduced the availability of liability insurance and drove up its price.
They made claims that they could win in court but decided to settle because they no longer wanted to accumulate legal fees. The settlement included a large donation of $3 million dollars to the University of Texas at Austin to create a non-profit that would help train and educate Texas insurance regulators. The settlement included not having insurers involved in the wording for liability policies in the future unless consulted. This case was one of twenty in which attorney generals went looking for antitrust issues to make charges and Texas took over this case on its own while the other nine-teen were handled by the federal government.
I have read many opinions on Anti-trust laws and regulations and often side with people who find their existence to be a hindrance on the free market. Even siding with the opinion that monopolies are set up to look like the bad guys but often become what they are because they work to the benefit of the consumer. For instance, if you look at Walmart, which exists to provide goods to its customers for the lowest possible price. Yet, with this particular circumstance, I believe the antitrust regulations were appropriately regulated, charged, and partially settled correctly.
The antitrust regulation concerning these four major Texas Insurers worked to the benefit and protection of the customer. It was an unfair practice to make it difficult for a customer to gain liability insurance to protect themselves from lawsuits or whatever else these providers were capable of covering. The fact that they came together to create a language within policies that worked to the benefit of only their bottom line and did not attempt to strike a happy medium between that and their clients’ needs was unethical. The charges were to the correct degree and came at the right time. I do not agree with the settlement which only seemed to punish the company as an intangible entity by creating an easy way out. There could have been a better settlement which included all that it actually included plus a probationary period for those directly involved with those policies. For instance, not being able to work in the insurance industry for 3 years while taking classes on insurance regulation and direct community service.
Although the companies were regulated by the Texas government, if they had not been, the policies which were created might have in fact created a less competitive environment for those insurers who actually wanted to provide liability insurance. Insurers had made their own services unattainable therefore another competitor could have come in and struck up a great offer for consumers. Perhaps that new competitor with low costs would have been a new anti-trust regulation issue. Instead, I believe the change in policy will benefit the most possible people and provide an average distribution of liability insurance across all insurers.
Overall, it appears as though the insurance industry is not really as interested in protecting their clients as much as they are in receiving a regular check for imaginary future misfortunes and this case sheds a real light on this issue of ethics and how anti-trust regulations work. Fortunately, the antitrust laws have come in handy and benefited the population of Texas by providing checks and balances to the insurance system.
