Texas All Lines Adjuster Practice Test

What aspect of insurance does the McCarran-Ferguson Act address?

1. Protection of consumer rights

2. Regulation of health insurance costs

3. State control over insurance regulation

4. Consumer protection against malpractice

The correct answer is: State control over insurance regulation

The McCarran-Ferguson Act primarily addresses the aspect of state control over insurance regulation. Enacted in 1945, this legislation essentially grants states the authority to regulate and oversee the insurance industry, affirming that federal law does not supersede state laws in this area, provided that the states are actively regulating the insurance business. The Act was established to encourage state regulation to ensure that insurance companies remain solvent and that consumers are treated fairly. By framing insurance regulation within this context, the McCarran-Ferguson Act has allowed states to tailor their insurance practices to meet local needs and to establish laws governing the conduct of insurers. This has led to a diverse regulatory environment across the country, reflecting varying consumer protections and insurance market conditions. The other options relate to aspects of insurance that may be influenced by regulatory practices but are not the primary focus of the McCarran-Ferguson Act. While consumer rights, health insurance costs, and malpractice protections are essential considerations in the insurance context, they do not directly reflect the core purpose of the Act, which is to affirm state control over the industry's regulation.