Under McCarran-Ferguson Act of 1945, insurance is regulated primarily at which level?

• A. State level
• B. Federal level
• C. International level
• D. Self-regulated by insurers

Answer: (A)

The main idea is that regulation of the business of insurance is handled primarily by the states due to the McCarran-Ferguson Act. This act returned authority to state regulators after a Supreme Court decision had treated insurance as subject to federal antitrust laws, affirming that the business of insurance shall be regulated by the laws of the state. State insurance departments license insurers, approve policy forms and rates, monitor solvency, and protect consumers. The federal government’s role is limited, and insurers receive a narrow antitrust exemption for activities that states regulate, but the overall framework remains state-based. So the correct answer is the state level.