Primerica Life Producer Practice Test

What significant decision did the U.S. vs. South-Eastern Underwriters case establish regarding insurance?

1. Insurance is considered to be a gift

2. Insurance is considered to be interstate commerce subject to federal regulation

3. Insurance does not need to comply with state laws

4. Insurance can only be regulated within states

The correct answer is: Insurance is considered to be interstate commerce subject to federal regulation

The U.S. vs. South-Eastern Underwriters case established that insurance is considered to be interstate commerce subject to federal regulation. This landmark decision was significant because it shifted the understanding of how insurance was treated under the Commerce Clause of the U.S. Constitution. Prior to this case, insurance was primarily regulated at the state level, and there was an ongoing debate over whether it constituted interstate commerce. The ruling clarified that because insurance companies often operate across state lines and provide services that affect people in multiple states, the federal government has the authority to regulate the industry. This ruling paved the way for more extensive federal oversight of insurance practices, impacting how insurance companies conduct business and ensuring that consumer protections could be instilled federally. This decision altered the legal landscape of insurance regulation, establishing a precedent that continues to influence the interaction between state and federal law in the insurance industry today.