According to the McCarran-Ferguson Act, who primarily regulates the insurance sector?

The correct answer reflects the foundation laid by the McCarran-Ferguson Act, which was enacted in 1945. This Act affirms the role of state governments in regulating the insurance industry. It establishes that insurance is primarily regulated by individual states rather than at the federal level, which is a significant distinction. The reasoning behind this approach is to ensure that states can tailor their regulations to the specific needs and circumstances of their local insurance markets, thus allowing for greater responsiveness and adaptability in oversight.

The McCarran-Ferguson Act specifically grants states the authority to enact and enforce laws regarding insurance practices, ensuring that they can establish rules regarding license requirements, financial solvency standards, and consumer protections. Through this legislation, the federal government has effectively been sidelined in terms of regulating insurance, unless state regulation is deemed inadequate or if federal interest necessitates intervention.

Therefore, the emphasis on state regulation is not only a result of historical practice but also supported by this legislative framework, solidifying states' roles in the management and oversight of the insurance sector.