A question about the removal of anti-trust protection

[luie1168e]

It have been known that "Removal of anti‐trust protection may threaten the viability of advisory bureau rates, these rates promote competition by allowing smaller insurers to exist."

This passage have two parts, may someone give a clear and throughly please?

[alekhine4149]

I think this refers to a regulatory paradox that has been ongoing in the insurance industry. Insurance has been decided by the courts and law to be largely exempt from anti-trust regulation. Anti-trust regulation is intended to prevent collusion and promote competition. Since the insurance industry is mostly not subject to anti-trust laws, insurers like to pool their data with third party organizations like ISO (which is a modern name for the advisory bureaus).

This looks and smells like collusion, and it is tempting for politicians to carelessly demagogue the issue and crack down on these advisory organizations in order to improve competition. But it would also have a backfiring effect, since small insurers use the advisory bureaus for wise rates since they don't have data. Even large insurers rely on the advisory bureaus to complement their own data for lines they don't have enough data for. So competition could be paradoxically stifled instead.

Therefore, organizations like ISO have to continually promote their value in the insurance industry. They have to stress that they are not mandating rates but only suggesting them, and there can't be any coercion or pressure to adopt these rates. They have to also sell themselves as providers of information, facilitators of competition, and promoters of the public interest. Insurance affects lives, and the cost is difficult to predict, so it has historically received different treatment than other areas of the economy.