The Adequacy of State Insurance Rate Regulation: The McCarran-Ferguson Act in Historical Perspective

Any substantial inquiry into the functioning of the insurance commissioner in American society poses the question, at the threshold of the inquiry, whether state regulatory power over the insurance business is likely to continue, or whether insurance will fall increasingly under the aegis of the federal government. This article seeks to ascertain the minimum conditions for the permanent preservation of state regulatory power over the insurance business, and to determine whether they are now satisfied. These conditions may be summarily stated: the Congress of the United States has shown its willingness to apply federal antitrust and marketing legislation to the insurance business, to the extent that the states do not regulate. Application of such statutes would have destructive impact on the present structure of the insurance business. Even more important, it seems possible that once the federal government entered the field of insurance regulation, the scope of its intervention might increase until it occupied the field. Though rate regulation has been one of the lesser functions of the state insurance commissioner, federal concern with combinations of insurers to fix premium rates has now made adequate state regulation of rate making pivotal for the preservation of state control over insurance. Unless the commissioner is able to perform his statutory duty of regulating rates well enough to prevent effective pressures for federal regulation, he may cease to have any role to play in our society.