McCarran-Ferguson Act
A 1945 statute leaving regulation of the business of insurance to the states. A later federal law overrides it only by specifically relating to that business.
The McCarran-Ferguson Act is the reason state insurance regulation looks different from most other industries. Congress passed it in 1945, answering a Supreme Court ruling that had pulled insurance into federal reach as interstate commerce, and handed primary authority over the business of insurance back to the states. Its operative clause runs one way: a federal statute cannot “invalidate, impair, or supersede” a state insurance law unless it “specifically relates to the business of insurance.”
The object of that clause is an Act of Congress, and an executive order is not one. Executive Order 14365 leaves state insurance rules standing, but McCarran-Ferguson never has to reach it to produce that result, and the word insurance is absent from the order’s text. A general federal AI statute would run into the clause; one that “specifically relates to the business of insurance” would not. The same section carries a proviso running the opposite direction. Since 1948 the Sherman, Clayton, and Federal Trade Commission Acts have applied to the business of insurance to the extent that business is not regulated by state law, and the FTC’s AI work runs there. When state regulators defend their AI governance rules in court, this is the statute they reach for.
State AI requirements come first, and federal preemption arguments are litigation risk rather than a reason to pause compliance. See our analysis of Executive Order 14365 and state insurance regulation.