What does the McCarran Ferguson Act establish regarding insurance regulation?

The McCarran Ferguson Act establishes that states are primarily responsible for regulating the insurance industry, but this state regulation exists alongside the potential for federal oversight in specific circumstances. This means that while states have the authority to enact and enforce their own insurance laws and regulations, certain federal regulations may apply, particularly if the state laws are deemed to be in conflict with federal interests.

This legislation, enacted in 1945, recognizes the importance of state-based regulation as it has traditionally been effective in addressing the unique aspects of the insurance market. However, the Act also allows for federal regulation if there are issues of national significance, ensuring that federal interests can take precedence when necessary.

The other options do not capture the nuanced relationship established by the McCarran Ferguson Act. While states have significant regulatory authority, they are not entirely free from federal oversight, and the federal government does not assert absolute control over the insurance industry. The Act does not mandate that all practices must be federally regulated or that insurance agents must operate on a national level, which reinforces the truth of the selected answer regarding the balance of power between state and federal regulation.