McCarran-Ferguson Restoration Act
- Sponsor
- Rep. Downing, Troy [R-MT-2]
- Committees
- Financial Services Committee (primary)
- Last action
- Jan 16, 2026
Bottom line
The bill restructures federal engagement with the insurance sector, shifting from a dedicated office with broader mandates to a representative focused on international prudential matters and limited preemption authority, aiming to reinforce state-based insurance regulation.
What it actually does
This bill eliminates the Federal Insurance Office (FIO) within the Department of the Treasury and establishes a new position, the United States Insurance Representative (USIR), within the same department. The USIR would primarily focus on prudential aspects of international insurance matters, negotiating covered agreements, and determining when State insurance measures are preempted by these agreements, while explicitly limiting federal regulatory authority over the broader business of insurance.
Proponents argue
Supporters argue that the FIO overstepped its original mandate, encroaching on state regulatory authority. They contend that establishing a USIR with a narrower, internationally-focused prudential role, while explicitly preserving state control over rates, underwriting, and solvency, restores the intent of the McCarran-Ferguson Act by reaffirming state primacy in insurance regulation. This change would streamline federal involvement to essential international coordination without creating a de facto federal regulator.
Opponents contend
Critics might argue that eliminating the FIO and narrowing federal oversight could weaken the federal government's ability to monitor systemic risks in the insurance sector, especially in a globally interconnected financial system. They might also contend that the new USIR's preemption authority, even if limited, still creates uncertainty for state regulators and could lead to a less robust, fragmented regulatory environment, potentially harming consumer protection or market stability.
The bill is relatively short and clearly structured, making it accessible for an informed reader to evaluate its core changes within a reasonable timeframe.
Section 2
Elimination of Federal Insurance Office
This section completely abolishes the Federal Insurance Office (FIO) and the position of its Director within the Department of the Treasury. It clarifies that this elimination does not remove any existing authority the Secretary of the Treasury has regarding insurance matters.
Supporters argue
Supporters argue this eliminates an office that has grown beyond its intended scope, restoring balance to federal-state insurance regulation.
Critics contend
Critics might argue that eliminating the FIO removes a valuable federal resource for monitoring the insurance market and coordinating policy.
Tradeoffs
Balances the desire to reduce federal footprint with potential loss of a dedicated federal insurance expertise hub.
Section 3, amending Title 31, United States Code, Section 313(a)
Establishment of United States Insurance Representative
This provision mandates the Secretary of the Treasury to appoint a United States Insurance Representative (USIR) within one year of the bill's enactment. It also requires the hiring and retention of individuals with insurance expertise to support the USIR.
Section 3, amending Title 31, United States Code, Section 313(b)
Defined Duties of the USIR
The USIR's duties are specifically enumerated, including coordinating federal efforts on international prudential insurance matters, representing the Treasury in international bodies (like IAIS), assisting in negotiating covered agreements, determining preemption of state measures by covered agreements, assisting with the Terrorism Insurance Program, consulting with states, and advising the Secretary on international policy.
Section 3, amending Title 31, United States Code, Section 313(c)
Limitations on USIR Scope
The USIR's authority extends to prudential aspects of all lines of insurance, except health insurance (as defined by PHSA), long-term care insurance (unless included with life/annuity components, with HHS coordination), and crop insurance (as established by the Federal Crop Insurance Act).
Section 3, amending Title 31, United States Code, Section 313(d)
Standard and Process for State Law Preemption
This section outlines a strict standard and process for the USIR to preempt state insurance measures. Preemption can only occur if a state measure treats a non-U.S. insurer from a covered agreement jurisdiction less favorably than a U.S. insurer in that state, and is inconsistent with a covered agreement. The process involves notification, consultation with states and USTR, public comment, a determination period, and a requirement that preemption achieves substantially equivalent consumer protection.
Section 3, amending Title 31, United States Code, Section 313(h)
Safeguards for State and Federal Authority
This section explicitly states that the bill does not alter, amend, or limit the Consumer Financial Protection Agency Act, affect existing federal preemption, or preempt state measures governing rates, premiums, underwriting, sales practices, coverage requirements, antitrust laws, or capital/solvency (unless it discriminates against non-U.S. insurers). It also clarifies that the USIR or Treasury does not gain general supervisory authority over insurance and does not limit other federal financial regulatory agencies or the USTR.
Section 3, amending Title 31, United States Code, Section 313(i)
Reporting Requirements for USIR
The USIR is required to submit annual reports to the President and relevant Congressional committees. These reports must detail any preemption actions taken during the preceding year and, within two years of enactment, describe international insurance regulation coordination and the international competitiveness of U.S. insurers.
Section 4
Conforming Amendments to Existing Law
This section makes necessary technical amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act. These amendments replace references to the 'Federal Insurance Office' or its 'Director' with 'Secretary of the Treasury' or 'United States Insurance Representative' to reflect the new structure.
Section 5, amending Section 111 of the Dodd-Frank Act
Financial Stability Oversight Council Membership Changes
This section modifies the membership of the Financial Stability Oversight Council (FSOC). It adds a State insurance commissioner, appointed by the President with Senate consent, as a voting member. It also removes the USIR as a non-voting member and eliminates the previously designated 'independent member with insurance expertise' position. The bill outlines a process for the President to request recommendations from the National Association of Insurance Commissioners for the State insurance commissioner appointment.
While generally stating that the bill does not preempt state insurance measures governing capital or solvency, it includes an exception: 'except to the extent that such State insurance measure results in less favorable treatment of a non-United States insurer than a United States insurer.'
Section 3, amending Title 31, United States Code, Section 313(h)(3)(D)
Why it matters:This is standard legislative drafting to provide a nuanced limitation. It ensures that while states generally retain solvency regulation, they cannot use it to discriminate against foreign insurers in a way that violates covered agreements.
Case for: Supporters would argue this exception is crucial for ensuring the U.S. can meet its international obligations under covered agreements, preventing states from erecting protectionist barriers under the guise of solvency regulation.
Case against: Critics might argue that this exception, however narrow, still provides a potential avenue for federal intervention into a core area of state regulation, potentially undermining state efforts to ensure robust financial stability for all insurers.
Estimated impact: Potentially significant for international insurers seeking to operate in the U.S., ensuring a level playing field under international agreements.
Determinations made by the USIR regarding the preemption of state insurance measures are subject to judicial review under the Administrative Procedures Act, but with a critical modification: 'the court shall determine the matter de novo.'
Section 3, amending Title 31, United States Code, Section 313(e)
Why it matters:This is a standard legal procedural detail, but its inclusion here is particularly important as it grants courts a higher level of scrutiny over USIR preemption decisions than typically afforded to agency actions.
Case for: Supporters would argue that requiring de novo judicial review provides a strong check on the USIR's power, ensuring that any preemption of state law is thoroughly reviewed by an independent judiciary, thus protecting state sovereignty.
Case against: Critics might argue that de novo review could lead to prolonged litigation and uncertainty, potentially hindering the USIR's ability to effectively implement covered agreements and ensure consistent federal policy.
Estimated impact: Increases the legal risk and burden for the USIR when making preemption determinations, and provides a stronger avenue for states to challenge such decisions.