Catholic University Law Review
The movement to reform the McCarran-Ferguson Act is misplaced. The Supreme Court and the lower federal courts are inferior forums for resolving insurance-related controversies. The language of the McCarran-Ferguson Act is unclear, and this lack of clarity created division among the federal courts.
Courts are divided over the definition of “business of insurance” and this causes problems for both consumers and the insurance industry. In addition, the Act also states that the Sherman Act shall apply to any insurance-related agreement or activity involving boycott, coercion, or intimidation; yet again, courts are divided over the applicability of the Sherman Act. Also, courts are divided over the McCarran Act and whether it prevents a plaintiff from commencing an action against an insurer under federal insolvency and superpriority statutes. Finally, the Supreme Court, as well as federal appellate courts, permit extra-legal factors to influence whether a case is decided in favor of state insurance commissioners and insurance consumers or in favor of insurance companies.
Federal courts have decided a variety of insurance-related questions on the basis of factors that have little to do with the legal issues presented in the complaints. Congress should prevent federal courts from deciding any legal issue or question concerning the business of insurance or the massive insurance industry. Congress should also create a federal insurance agency and give that body the authority to regulate the business of insurance within and across state boundaries.
Willy E. Rice, Federal Courts and the Regulation of the Insurance Industry: An Empirical and Historical Analysis of Courts' Ineffectual Attempts to Harmonize Federal Antitrust, Arbitration, and Insolvency Statutes with The McCarran-Ferguson Act--1941-1993, 43 Cath. U. L. Rev. 399 (1994).