Georgia Property & Casualty Practice Exam

What did the McCarran-Ferguson Act grant to states concerning insurance regulation?

1. Complete federal control

2. Limited applicability of certain federal laws

3. No right to regulate

4. Complete autonomy from federal law

The correct answer is: Limited applicability of certain federal laws

The McCarran-Ferguson Act is significant in the context of insurance regulation as it specifically grants states the authority to regulate the business of insurance without interference from federal laws, as long as the states' regulations are adequate. The Act essentially provides that federal insurance laws will not apply if the state laws are found to be effective. This means that while states have the primary responsibility for regulating insurance practices, certain federal regulations may still apply, but only to the extent that they do not interfere with the state's ability to regulate effectively. This limited applicability of certain federal laws acknowledges the balance between state and federal authority, allowing states to maintain their regulatory frameworks while ensuring that federal oversight is not unnecessarily imposed on the insurance industry. The intent of the McCarran-Ferguson Act is to promote a system where states handle the regulation of insurance, considering the unique nature of the insurance market and the various local factors affecting it.