United States v. Southeastern Underwriters Association 322 U.S. 533; 64 S. Ct. 1162; 88 L. Ed. 1440 (1944)

Facts—The Southeastern Underwriters Association represented private stock companies that sold fire insurance in six southeastern states. They were indicted in a federal District Court for violating the Sherman Antitrust Act by fixing and maintaining arbitrary and non-competitive premium rates, and by monopolizing the trade and commerce in fire insurance in and among the same states. They contended that selling insurance was not commerce and did not come under the interstate commerce regulations.

Question—Do fire insurance transactions that stretch across state lines constitute “commerce among the several states” subject to congressional regulation?

Decision—Yes.

Reasons—J. Black (4–3). The basic responsibility in interpreting the commerce clause is to make certain that the power to govern intercourse among the states remains where the Constitution placed it. That power is vested in Congress, to be exercised for the national welfare as Congress shall deem necessary. No commercial enterprise of any kind that conducts its activities across state lines is wholly beyond the regulatory power of Congress under the commerce clause. The insurance business is no exception.

Note—Southeastern reversed the long-standing precedent, Paul v. Virginia, 8 Wallace (75 U.S.) 168 (1869). Congress reacted by passing the McCarran Act permitting the states to continue to regulate insurance, and it was upheld in Prudential Insurance Company v. Benjamin, 328 U.S. 408 (1946). The results of the McCarran Act make it appear that the issue in Southeastern had never been decided.