In the United States v. South-Eastern Underwriters Association case of 1943, the Supreme Court ruled that insurance companies doing business across state lines could be regulated by federal law under the Commerce Clause of the U.S. Constitution. The decision overturned a longstanding precedent which held that issuing an insurance policy was not a transaction in commerce and thus outside federal jurisdiction. The South-Eastern Underwriters Association had been indicted for price fixing and monopolistic practices, but argued it was exempt from prosecution because its activities were not subject to interstate commerce regulations. However, this argument was rejected by Justice Hugo Black who wrote for the majority stating "No commercial enterprise of any kind which conducts its activities across state lines has been held to be wholly beyond the regulatory power of Congress." This ruling led directly to passage of McCarran-Ferguson Act in 1945 allowing states to continue regulating insurance within their borders while also affirming Federal government's authority over such matters when they involve interstate trade.

In the dissenting opinion for United States v. South-Eastern Underwriters Association, Justice Frank Murphy argued that insurance transactions did not constitute interstate commerce and therefore should not be subject to federal regulation under the Commerce Clause of the Constitution. He contended that insurance is a local activity, as it involves contracts made within individual states between insurers and policyholders. The fact that these companies may operate in multiple states does not change this fundamental nature of their business operations. Furthermore, he expressed concern about potential overreach by Congress if they were allowed to regulate such activities under an overly broad interpretation of its powers related to interstate commerce.