McCarran-Ferguson history

The McCarran-Ferguson Act of 1945 came in response to the Supreme Court's 1944 decision in U.S. vs. South-Eastern Underwriters Assn., a decision that declared insurance to be interstate commerce and therefore subject to regulatory authority.

The Supreme Court's decision in South-Eastern Underwriters overturned its 1869 decision in Paul vs. Virginia, which held insurance did not constitute interstate commerce. Sens. Patrick McCarran, D-Nev., and Homer Ferguson, R-Mich., introduced a bill to restore state primacy in insurance regulation.

Under the McCarran-Ferguson Act, states retain primary regulatory authority over the business of insurance. The act exempts insurers from certain federal antitrust statutes to the extent that it is regulated by the states. The exemption applies primarily to gathering data for the purposes of rate-making.

The act does not exempt insurers from federal antitrust law as it applies to agreements or acts of boycott, coercion or intimidation.