What is the primary federal law that governs insurance company practices?

The McCarran-Ferguson Act is the primary federal law that governs insurance company practices in the United States. Enacted in 1945, this law allows states to regulate the insurance industry without interference from federal law, affirming the principle of state regulation over the insurance sector. It essentially provides a framework that ensures that while federal regulations may exist, they do not preempt state laws regarding the business of insurance, which is essential to maintaining localized control and oversight.

This law is particularly significant because it reflects the historical context in which insurance was developed, emphasizing the importance of state regulation in addressing the unique needs and risks associated with insurance products. Since the McCarran-Ferguson Act was designed specifically to promote state regulation, it reinforces the state's authority in taxation, regulation of rates, and admitting new insurers, which are all crucial aspects of the insurance business.

Understanding this act is vital for anyone studying insurance because it establishes the foundation for how insurance companies operate in relation to state and federal laws. Other acts mentioned address different aspects of finance and healthcare but do not focus specifically on insurance regulation like the McCarran-Ferguson Act does.