concurring in part and dissenting in part.
Because I believe that PIA’s activities concerning the E & 0 insurance were substantially related to PIA’s exempt purposes, I dissent from that portion of the majority opinion holding the revenue from the E & 0 insurance plan taxable.
The majority adopts the requirement that “[f]or a substantial relationship to exist, any direct benefits flowing from a business league’s activities must inure to its members in their capacities as members of the organization.” Majority opinion, supra, at 1103. This requirement was established in the Fifth Circuit in Louisiana Credit Union League v. United States, 693 F.2d 525 (5th Cir.1982). The capacity in which members receive benefits from an activity should be a factor to be considered in determining whether the activity is substantially related *1105to the organization’s exempt functions. However, I see no justification for requiring members to receive benefits only in their capacity as members.1 PIA’s exempt function is to promote one industry — the independent agency system of selling insurance. The statutory requirement of a substantial relationship to an exempt purpose could thus be satisfied by any activity that substantially benefits the industry as a whole. This would include not only activities such as lobbying and advertising, which benefit members solely in their capacity as industry members,2 but also activities which directly benefit some members in their capacity as members. The majority’s test therefore asks the wrong question: instead of measuring individual benefits, and taxing activities that produce any, we should be measuring benefits to the industry and taxing activities that produce none that are substantial.
A broader, less rigid approach was recently used by the Fourth Circuit in Caro-linas Farm & Power Equipment Dealers Ass’n v. United States, 699 F.2d 167 (4th Cir.1983). That case presented the question of whether income derived from life and health insurance plans sponsored by an association of independent retail farm and power equipment dealers was substantially related to the organization’s exempt function. The court noted that:
it is often difficult to determine whether a trade association’s activities primarily benefit individual members or the trade generally since the interests of both are inevitably intertwined. In this case, for example, the provision of low-cost life insurance most directly benefits those members of the Association who choose to participate in the program, but it can also be said to benefit the entire industry — at least that operating in North and South Carolina — since it makes available to all the option to join in such a program.
699 F.2d at 171. The court then considered three factors as evidence that the plans benefited primarily individual members and not the industry as a whole: (1) the fees charged members were in direct proportion to the benefits received; (2) participation was limited to the organization’s members and the program was of no benefit to those in the industry who were not members; and (3) the service provided was otherwise generally available in the marketplace. Examination of the E & 0 insurance plan at issue reveals that none of these factors is present.
First, the availability and widespread acceptance of E & 0 insurance provides certain benefits to all members of the industry whether or not claims are paid on behalf of all members. If this form of malpractice insurance were unavailable, small independent agencies would be vulnerable to errors resulting in lawsuits that could put a small agency out of business. Thus, it would be difficult to get responsible persons to operate independent agencies. Making such insurance available promotes public confidence in the independent agency system by increasing stability, accountability for errors, and the integrity of the industry. Improving public confidence benefits an industry in the same way as does advertising. This benefit is received equally by all members, since the public is probably not aware of which agencies have the insurance, and therefore it is not conferred only in direct proportion to the fees paid by members. The competition of independent agencies are large insurance companies that sell through their own employees. They are perceived as being financially sound. To compete, independent agents must promote the same image.
Second, the program’s benefits are not. restricted to PIA members. The E & 0 *1106insurance is also available to nonmember agents. It is also worth noting that the 75 to 80 percent of PIA’s membership who subscribe to the E & 0 insurance represent a significant segment of the industry. Participation could not be increased to 100% without endangering one of the program’s benefits; if PIA were somehow able to obtain uniform automatic E & 0 coverage for all its members, the insurance carrier would not provide an incentive for good insurance practices by refusing to insure agencies that were poor risks, and the public protection benefit would be decreased rather than increased.
Third, E & 0 insurance is not easily available to independent agencies from other sources.3 The congressional purpose to prevent exempt organizations from enjoying an unfair advantage over competing nonexempt businesses is therefore not endangered. See Louisiana Credit Union League v. United States, 693 F.2d 525, 539-40 nn. 27-29 (5th Cir.1982) and legislative history cited therein.
The availability of E & O insurance is related to the association’s exempt purpose in exactly the same way as would be an educational seminar program. Members who chose to participate in an educational seminar would receive direct benefits by increasing their knowledge and expertise, which would presumably help their individual businesses. Such benefits might only be available to those, members willing to pay a fee for the seminar. The entire industry, however, would be benefited by the availability of programs that enrich the knowledge of its members. The same is true for the availability of E & O insurance.
The income PIA gained from the E & O insurance plan is therefore substantially related to PIA’s exempt purposes, and not unrelated business taxable income. I would therefore reverse the Tax Court with respect to the E & O income and remand for recalculation of PIA’s liability. I do, however, concur with the majority that PIA’s other insurance-related income is unrelated business taxable income.
Accordingly, I dissent in part and concur in part.
. The Louisiana Credit Union League court cited no authority to support imposing this requirement.
. A strict construction of the majority’s test, which requires all direct benefits to be received in the capacity of members of the organization, would tax even advertising and lobbying activities; these activities normally benefit members in their capacity as members of the industry, rather than as members of the organization.
. See Oklahoma Cattlemen’s Ass’n v. United States, 310 F.Supp. 320 (W.D.Okl.1969) (health and life insurance plans substantially related to exempt function since self-employed members have no other opportunity to participate in group plans).