ASA encourages states to ban property, casualty insurers from using most favored nation clauses

The state of Michigan recently approved Senate Bill 61 and Senate Bill 62, which were promptly signed by the governor. These bills address multiple health insurer issues including prohibiting Most Favored Nation (MFN) or customer clauses in health insurer contracts. The legislation did not address property and casualty insurers.

“Although this legislation does not include property and casualty insurers, it supports ASA’s position that MFN clauses can harm consumers,” said Ron Pyle, ASA president and chief staff executive. “We are going to continue to work with the Department of Justice as well as state legislators to educate them on the negative impact they have upon the consumer and the entire collision repair industry.”

ASA participated in a workshop on MFN clauses in September 2012 hosted by the U.S. Department of Justice and the Federal Trade Commission. MFN clauses appear in a number of agreements offered by major national insurance companies. Following the workshop, ASA sent a letter to the assistant attorney general for the Antitrust Division at the U.S. Department of Justice, asking for a review of the MFN clauses used in many property and casualty direct repair agreements. The letter emphasized the potentially harmful, anti-competitive impact of these clauses on consumers and collision repair shops.