On June 5, 1944, the Supreme Court of the United States (SCOTUS), reversed 75 years of caselaw based on the Court’s opinion in Paul v. Virginia 75 U.S. (8 Wall.) 168 (1869). The opinion in United States v. South-Eastern Underwriters Association, 322 U.S. 533 (1944), or SEUA, ruled that the “business of insurance” is commerce and interstate commerce, and subject to the jurisdiction of the Congress.
On June 7, 1944, with American and Allied troops still pinned down on the beaches of Normandy, Radcliffe had the standing with Roosevelt to get a few minutes with the president to discuss a Supreme Court decision announced two days earlier, which found insurance to be interstate commerce. That discussion started the White House’s legislative liaison that ended in passage of the McCarran-Ferguson Act.
The SEUA decision presented two problems of public policy. The first policy issue concerned the immediate application of federal law, including antitrust law and fair-trade enforcement, to a business sector that formally used anti-competitive frameworks to create prices and products. The second policy issue concerned state governments’ reliance on insurance premium taxes for revenue. Some insurers argued that the SEUA decision relieved their companies from paying taxes to the states.
The Roosevelt Administration, Congressional Leadership, and State Officials wanted Congress to act in response to the SEUA. The states wanted the issue settled before premium tax payments we due in the spring of 1945. Acting under the umbrella of the National Association of Insurance Commissioners (NAIC), the state insurance regulators negotiated with Congress and the Roosevelt Administration. At that time, the NAIC President was Robert Dineen, who served as Insurance Superintendent for New York State, who served at the pleasure of Governor Thomas E. Dewey – Roosevelt’s Republican Presidential opponent.
So, we should note that a Dewey political appointee had more input in the drafting of the McCarran-Ferguson Act than Senator Pat McCarran.
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