AD Banker Comprehensive Practice Exam

Which act provided the federal government the right to regulate the insurance industry concerning fraud and false statements?

1. McCarran/Ferguson Act

2. COBRA Act

3. HIPAA Act

4. Gramm-Leach-Bliley Act

The correct answer is: McCarran/Ferguson Act

The McCarran/Ferguson Act is pivotal in the regulation of the insurance industry in the United States, particularly concerning fraud and false statements. Enacted in 1945, this act gives states the authority to regulate the insurance business while allowing the federal government to intervene in cases of fraudulent activities or in the event that state regulation is inadequate. This legislation recognizes the importance of state-level regulation for the insurance sector while simultaneously affirming the federal government's role in ensuring ethical practices and protecting consumers from false statements in insurance marketing and policies. The other acts listed do focus on different aspects of regulation. The COBRA Act relates to health insurance and employee benefits, the HIPAA Act deals primarily with patient privacy and health information security, and the Gramm-Leach-Bliley Act addresses financial services and privacy issues rather than insurance regulation directly. Therefore, the McCarran/Ferguson Act stands out as the legislation specifically empowering the federal government to combat fraud and ensure truthful representations within the insurance market.