The McCarran-Ferguson Act of 1945 primarily does what regarding insurance regulation?

The McCarran-Ferguson Act of 1945 is significant because it clarifies the relationship between state and federal regulation of insurance. The act specifically exempts insurance companies from most federal regulation, allowing states to regulate insurance companies and their practices. This was enacted to ensure that states would continue to oversee the insurance industry, recognizing that local governments are better positioned to understand and manage the unique aspects of insurance.

This exemption means that federal laws typically take precedence over state laws; however, for the insurance industry, if a state regulates an activity, the federal government generally cannot intervene. This framework was designed to uphold the principle that state regulation is sufficient for ensuring the financial soundness of the insurance industry and protecting policyholders.

The other options imply a complete lack of federal involvement or the complete control of insurance regulation by the federal government, which is not the case under the McCarran-Ferguson Act. The act does not eliminate federal oversight altogether or allow for only state regulation without exceptions, as there are scenarios where federal regulation can apply, particularly when it concerns antitrust laws or specific federal interests. Thus, the most accurate representation of the McCarran-Ferguson Act's impact is the exemption of insurance businesses from federal regulation, allowing states to