Number: RL31982
Title: Insurance Regulation: History, Background, and Recent Congressional Oversight
Authors: Baird Webel, Government and Finance Division 
Abstract: States are now the primary regulator of insurers. Some insurers  joined by some banks with insurance affiliates  believe that current state insurance regulation hinders their effective competition with other financial intermediaries. Congress has several interests in any examination of state insurance regulation. In the 1945 McCarran-Ferguson Act it ceded that insurance regulatory authority to the states, but it also committed to assessing the effectiveness of this regulation. Another is to assess the marketplace after the Gramm-Leach-Bliley Act, which dramatically revised regulation for most of the financial services industry, but left insurance regulation essentially unchanged. The objective of this report is to frame these issues in their historical and substantive contexts. The frame will have several parts. One is that insurance regulation developed at the state level largely because most companies were local. A second is that, until 1945, the courts said that Congress did not have the constitutional authority to regulate insurance. Third, since the 1950s, Congress and the National Association of Insurance Commissioners (NAIC) have been engaged in a ongoing dialogue about the nature and quality of state regulation, which has led both to the substantial growth of the NAIC and to increasing federal legislative involvement in insurance regulation. Fourth, insurance is now regulated at both the state and national level.
Pages: 29
Date: February 11, 2005