McCarran–Ferguson Act

The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. The McCarran–Ferguson Act was passed by the 79th Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution and that the federal antitrust laws applied to the insurance industry.

The Act was sponsored by Senators Pat McCarran (D-Nev.) and Homer Ferguson (R-Mich.).

The McCarran–Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. It provides that "Acts of Congress" which do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance."

Specifically with respect to federal antitrust laws it exempts the "business of insurance" as long as the state regulates in that area, with the proviso that cases of boycott, coercion, and intimidation remain prohibited regardless of state regulation. By contrast, most other federal laws will not apply to insurance whether the states regulate in that area or not.

Until the middle of the 19th century insurance largely went unregulated in the United States. New Hampshire in 1850 was the first state to appoint an insurance commissioner. In 1852 Massachusetts appointed a commission and California, Connecticut, Indiana, Missouri, New York and Vermont either established a separate insurance department or vested the power to regulate insurance in an existing agency. Shortly thereafter, other states followed until by 1871 nearly every state had "some type of supervision and control over insurance companies." Often the legislation and rules promulgated by insurance commissions of one state conflicted with those of others. And in some cases the rules that applied to out-of-state insurers deprived them of substantial rights. For example, one state required out-of-state insurrers to post a bond that it would not appeal any case to the United States Supreme Court.

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