The American system of insurance regulation has long been grounded in principles of federalism. The states serve as the principal regulators of insurance companies they charter. One might be tempted to think that only one side of the political spectrum would continue to support this regulatory design. To the contrary, since the McCarran-Ferguson law was first signed by President Roosevelt in 1945 and cemented the states’ sole jurisdiction over insurance regulation there has been strong bipartisan support for the state-based insurance system.

In recent years, a slow creep of nationalization has threatened state insurance regulation, as federal agencies and trade negotiators have increasingly recognized the authority of international regulatory bodies to impose global standards on American insurance firms. H.R. 4537, the International Insurance Standards Act, introduced by Reps. Sean DuffySean DuffyCNN's Ana Navarro to host Biden roundtable on making 'Trump a one-term president' Bottom line McCarthy blasts Pelosi's comments on Trump's weight MORE (R-Wis.) and Denny HeckDennis (Denny) Lynn HeckExclusive: Guccifer 2.0 hacked memos expand on Pennsylvania House races Heck enjoys second political wind Incoming lawmaker feeling a bit overwhelmed MORE (D-Wash.), would defend the state-based system by reforming the power of American officials to negotiate insurance agreements abroad.


The bill would simply require that international regulatory bodies recognize the legitimacy of the U.S. state-based system, ensure state insurance regulators are included in any international negotiations, require notice to Congress concerning those negotiations, and provide for a congressional procedure to review international agreements.

The bill obtained broad bipartisan support in the House of Representatives, with the strong leadership of both Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingLawmakers battle over future of Ex-Im Bank House passes Ex-Im Bank reboot bill opposed by White House, McConnell Has Congress lost the ability or the will to pass a unanimous bipartisan small business bill? MORE (R-Texas) and current Ranking Member Maxine Watters (D-Calif.) and was approved by voice vote on the House floor.  Consider that for a bill to be approved by voice vote means that not only do an overwhelming percentage of both Democrats and Republicans approve the bill, but not one member even felt urged to call for a roll call vote.

The legislation also fits into ongoing debates about protectionism to create yet another unique coalition of support, in the form of a rare bridge joining anti-globalist Trump supporters with more establishment Republicans and libertarians. The former focus on American exceptionalism, while the latter focus on the rule of law and worry international coordinating bodies frustrate full judicial and congressional review of overregulation.  

Libertarians and free traders have criticized the administration for their stance on international trade agreements at the WTO, but on this issue, the America First crowd and free market views come together. The anti-globalist Trump supporters can rest easy that the bill puts American regulators in the drivers seat on insurance matters. Free market libertarians can also take comfort that the Federal Reserve and Treasury will no longer enter into binding international agreements in ways that circumvent domestic notice and comment and congressional and judicial review. Protectionism against foreign bureaucrats is something all Americans can agree upon.

Or at least that should be true. Readers may ask why such a strongly bipartisan law, with support from such unique corners binding together anti-globalism Trump supporters, libertarians, traditional Republicans, and many Democrats, hasn’t already been signed into law. The simple answer is that a small handful of American insurance companies operating abroad have been able to negotiate outcomes they find favorable at international regulatory bodies and worry this bill may upset their apple cart.

No doubt some officials at the Treasury Department are also reluctant to limit their own powers, much the way that Secretary Mnuchin has pushed back on any limits to the statutory authority of the Financial Stability Oversight Council (FSOC) that he leads. Such parochial interests should be ignored when core policy concerns like federalism, regulatory accountability, and American competitiveness are at stake. 

Hensarling is leading negotiations over a package of financial regulatory reforms to be included in the lame duck appropriations package, including possibly this legislation. He once observed that “the U.S. economy does not need a one-world view of risk imported from Europe” as American regulatory agencies “seemingly rubber-stamped decisions” made by international financial regulators.

Likewise, incoming House Financial Services Committee Chairwoman Waters stated on the House floor that the legislation, “ensure(s) that international insurance standards or agreements are consistent with our domestic insurance system...(and)...encourages greater transparency, accountability, and congressional involvement in the development of international insurance standards...”.  It is not often that Chairman Hensarling and soon-to-be Chairwoman Waters so heartedly agree. 

Sen. Richard ShelbyRichard Craig ShelbyTop GOP senator warns government funding deal unlikely this week McConnell: COVID-19 relief will be added to omnibus spending package Bipartisan, bicameral group unveils 8 billion coronavirus proposal MORE (R-Ala.), chairman of the Senate Appropriations Committee shares similar skepticism regarding opaque and unaccountable international bodies drafting new rules for U.S. insurance companies. At a hearing on insurance regulation in 2015, Shelby stated, “An international regulatory regime should not dictate how U.S. regulators supervise American or U.S. based companies.”

Hensarling and Shelby should continue to lead on this important issue and ensure that this legislation remains in the JOBS Act 3.0 legislative package and is included in the year-end spending bill currently being negotiated. This would be another great legislative win for the Trump administration in its ongoing efforts to protect U.S. interests.

Verret is Associate Professor of Law at George Mason University Antonin Scalia Law School.