McCarran–Ferguson Act

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The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] 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.

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. "Acts of Congress" that do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance."[2]

The Act also provides that federal antitrust laws will not apply to the "business of insurance" as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation. By contrast, most other federal laws will not apply to insurance whether the states regulate in that area or not.[3]


United States v. South-Eastern Underwriters Association (322 U.S. 533) came before the Supreme Court in 1944 on appeal from a district court located in north Georgia. The South-Eastern Underwriters Association controlled 90 percent of the market for fire and other insurance lines in six southern states and set rates at non-competitive levels. Furthermore, it used intimidation, boycotts and other coercive tactics to maintain its monopoly.

The question before the Court was whether or not insurance was a form of "interstate commerce" which could be regulated under the Commerce Clause of the United States Constitution and the Sherman Anti-Trust Act. The general opinion in law before this case, according to the Court, was that the business of insurance was not commerce,[4] and the District Court concurred with the opinion. In his partial dissent at 322 U.S. 588, Justice Robert H. Jackson of the Supreme Court said:

4. Any enactment by Congress either of partial or of comprehensive regulations of the insurance business would come to us with the most forceful presumption of constitutional validity. The fiction that insurance is not commerce could not be sustained against such a presumption, for resort to the facts would support the presumption in favor of the congressional action. The fiction therefore must yield to congressional action, and continues only at the sufferance of Congress.

5. Congress also may, without exerting its full regulatory powers over the subject, and without challenging the basis or supplanting the details of state regulation, enact prohibitions of any acts in pursuit of the insurance business which substantially affect or unduly burden or restrain interstate commerce.

In short, the dissent stated that the conclusion that insurance was not commerce under the law rested with Congress, and that the Court should follow the lead of Congress.[citation needed]

As a result, on March 9, 1945, the McCarran–Ferguson Act was passed by Congress. Among other things, it:

  • partially exempts insurance companies from the federal anti-trust legislation that applies to most businesses[5]
  • allows states to regulate insurance
  • allows states to establish mandatory licensing requirements
  • preserves certain state laws of insurance.

In February 2010, the House voted 406-19 to repeal the McCarran–Ferguson Act with regard to health insurance.[citation needed]


  1. ^ "Public Law 15". Retrieved August 21, 2016. 
  2. ^ "McCarran-Ferguson Act of 1945". Retrieved 20 June 2013. 
  3. ^ "The McCarran-Ferguson Act: A History of Insurance". Retrieved 20 June 2013. 
  4. ^ Highsaw, Robert (December 1944). "Insurance As Interstate Commerce: An Analysis of the Underwriters Case". Louisiana Law Review. 6 (1): 24. 
  5. ^ Buckley, Bob (October 28, 2009). "Health insurance companies exempt from anti-trust laws". The Examiner. 

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