McCarran-Ferguson Act
A 1945 federal law leaving insurance regulation to the states unless a federal statute specifically relates to insurance, limiting federal preemption.
The McCarran-Ferguson Act is the reason state insurance regulation looks different from most other industries. Passed in 1945 after the Supreme Court held that insurance transactions could be regulated as interstate commerce, the act gives states the primary authority to regulate the business of insurance. It says that no federal statute shall be construed to “invalidate, impair, or supersede” state insurance regulation unless that federal statute “specifically relates to the business of insurance.”
For insurance AI, this matters because general federal AI laws or executive orders probably cannot preempt state insurance rules on their own. A federal statute that explicitly targets insurance could, but Executive Order 14365 does not mention insurance and does not repeal McCarran-Ferguson. State regulators cite the act as the doctrinal shield they will use to defend their AI governance rules in court.
The practical effect for carriers: comply with state AI requirements first, and treat federal preemption arguments as litigation risk rather than a reason to pause compliance. See our analysis of Executive Order 14365 and state insurance regulation.