Policy Form Standardization

• Pages: 75-85

75

CHAPTER V

POLICY FORM STANDARDIZATION

It has long been standard practice in the insurance industry to develop

standardized insurance policies.

364

This practice is generally immune from

federal antitrust scrutiny under the McCarran-Ferguson Act.

365

Indeed, so

long as: (1) state laws “require filing and review of policy forms”

366

or

“permit joint action by [the rating organization] and insurance companies

364. See Charles Gobel, The Moral Hazard Clauses of the Standard Fire

Insurance Policy, 37 COLUM. L. REV. 410, 410 (1937); and Thomas L.

Wenck, The Historical Development of Standard Form Policies, 35 J. RISK

& INS. 537, 537 (1968).

365. 15 U.S.C. §§ 1011-1015. The development of standardized policies falls

within the “business of insurance” for purposes of McCarran-Ferguson Act

immunity. SEC v. Nat’l Se cs., 393 U.S. 453, 460 (1969) (recognizing that

the “business of insurance” includes “[t]he type of policy which could be

issued, its reliability, interpretation, and en forcement”); see also Uniforce

Temporary Personnel, Inc. v. Nat’l Council on Compensation Ins., Inc., 87

F.3d 1296, 1300 (11th Cir. 1996) (holding that insurance companies’ “rate-

making activity clearly constitutes the business of insurance for purposes

of the McCarran-Ferguson Act”); UNR I ndus. v. Cont’l Ins . Co., 607 F.

Supp. 855, 862 (N.D. Ill. 1984) (“the type of coverage offered directly

affects the spreading of risk, is at the very heart of the policy relationship,

and the agreement is limited to insurance companies”); Pierucci v. Cont’l

Cas. Co., 418 F. Supp. 704, 708 (W.D. Pa. 1976) (“we hold that the

issuance of policies and forms which are used by the various companies

constitute part of the b usiness of insurance”) ; First Am. Title Co. v. South

Dakota Land Title Ass’n, 541 F. Supp. 1147 (D.S.D. 1982), aff’d on other

grounds, 714 F.2d 1439 (8th Cir. 1983), cert. denied, 464 U.S. 1042

(1984); Letter fro m Anne K. Bingaman, Assis tant Attorney Gener al,

Antitrust Division, to Joel M. Cohen, Jan. 25, 1994, available at

http://www.justice.gov/atr/ public/busreview/2117 24.pdf (Activities of

Insurance Services Office, which include development of advisory

standardized policy forms, fall within the “business of insurance”).

366. Freier v. New York Life Ins. Co., 679 F.2d 780, 782 (9th Cir. 1982)

(affording McCarran-Ferguson Act immunity because Montana insurance

code provisions “require approval of policies such as this by the insurance

commissioner”); Pierucci, 418 F. Supp. at 709 (relying on similar prior

approval statute in Pennsylvania).