What was the purpose of the McCarran-Ferguson Act?

The McCarran-Ferguson Act, enacted in 1945, was primarily designed to clarify the relationship and balance of power between state and federal governments in regulating the insurance industry. Prior to this legislation, there was uncertainty regarding whether federal regulation could supersede state regulation of insurance. The act explicitly recognized that states have the authority to regulate insurance activities, affirming that federal laws should not interfere with state regulation unless Congress expressly stated otherwise. This framework was important in maintaining the traditional state-based approach to insurance regulation, which has been a fundamental aspect of the U.S. insurance industry.

This choice accurately captures the essence of the McCarran-Ferguson Act, outlining its role in defining regulatory authority. The other options, while relevant to insurance law, do not encapsulate the primary purpose of the McCarran-Ferguson Act. The act does not focus on guidelines for fraud investigations, national licensing requirements, or directly enhancing consumer protection, even though state regulations influenced by the act could ultimately have an impact on consumer protection.