Life & Health Insurance Practice Exam 2026 - Free Practice Questions and Study Guide

The landmark Supreme Court case that determined the insurance industry is a form of interstate commerce regulated by the federal government is United States v. Southeastern Underwriters Association. This 1944 decision marked a significant shift in the way insurance companies were regulated. The Court ruled that insurance transactions across state lines constituted interstate commerce, thus placing the insurance industry under the purview of federal regulatory authority.

Prior to this case, the Paul v. Virginia ruling in 1868 suggested that states had the sole authority to regulate insurance within their borders. However, the United States v. Southeastern Underwriters Association overturned this precedent by affirming that insurance activities were indeed part of interstate commerce and could be regulated by federal law. This decision led to a more comprehensive federal oversight of the insurance market.

The McCarran-Ferguson Act is often discussed in this context as it enabled states to regulate insurance as long as the regulation was not inconsistent with federal law, but it came after the ruling of United States v. Southeastern Underwriters Association. Similarly, the intervention by the FTC refers to the Federal Trade Commission's involvement in business practices, which is not specifically tied to the determination of insurance as interstate commerce.