New Jersey Life Producer Practice Exam

Which case established that the insurance industry is subject to federal regulation?

1. Brown v. Board of Education

2. United States v. Southeastern Underwriters Association

3. Gibbons v. Ogden

4. McCulloch v. Maryland

The correct answer is: United States v. Southeastern Underwriters Association

The significance of the case United States v. Southeastern Underwriters Association lies in its determination that the insurance industry is indeed subject to federal regulation under the Commerce Clause of the United States Constitution. This landmark decision, made in 1944, clarified that insurance transactions, especially those happening across state lines, can be regulated at the federal level. This ruling shifted the regulatory landscape for the insurance industry, which had been primarily governed by state law prior to this case. The decision emphasized that the insurance business is part of interstate commerce, thus allowing federal oversight in matters concerning insurance practices. As a result, it established the premise that federal law could preempt state law in certain capacities within the insurance sector, leading to significant changes in how insurance companies operate and how they are regulated. This foundation supports the current system where both federal and state regulations coexist, but with particular aspects controlled at the federal level due to the implications of interstate commerce.