Opinion ID: 370296
Heading Depth: 1
Heading Rank: 2

Heading: THE McCARRAN ACT

Text: 8 The district court concluded that the McCarran Act exemption 7 was unavailable to Community because Georgia did not regulate disclosures accompanying the sale of insurance, and, even if it did, TIL would not conflict with Georgia law. We agree that the McCarran Act does not bar application of TIL, but for different reasons. 9 The McCarran Act is explored in depth in Cochran v. Paco, Inc., ante, 606 F.2d 460, and we refer the reader to that opinion for essential background. There we held that the lending activities of a premium finance company do not constitute the business of insurance and that the McCarran Act does not preclude application of TIL's disclosure requirements. Similarly, in Perry v. Fidelity Union Life Ins. Co., ante, 606 F.2d 468, we concluded that premium financing by an insurance company in connection with the sale of an insurance policy is not the business of insurance for McCarran Act purposes, and that TIL is thus applicable to such a loan transaction. 10 The instant case presents a hybrid situation. Plaintiffs contend that Community made a credit sale of an insurance policy and thus should have made the disclosures required when a credit sale occurs. See footnote 8, Infra. For purposes of our McCarran Act analysis, we assume that the loan managers, acting in their dual capacities as employees of Community and licensed agents of American Family, made a credit sale of cancer insurance and that Community was a seller under TIL. 11 The sale of an insurance policy is undoubtedly the business of insurance for McCarran Act purposes. Securities & Exchange Comm'n v. National Securities, Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969). However, Perry makes clear that the lending activities of an insurance company are apart from that business: the financing activity is purely ancillary to the insurance relationship between the insurance company and the policyholder. 606 F.2d at 470. Thus, Community's Selling of the cancer insurance policies constituted the business of insurance, although its Financing of them on a credit sale basis did not. 12 The mere fact that Community sold the policies that it financed does not preclude application of TIL, since the financing is insufficient to invoke the McCarran Act exemption. Accordingly, any inquiry into the nature of state regulation or the conflict between the state scheme and TIL is unnecessary. Cochran v. Paco, Inc., supra, 606 F.2d at 467 n.15. We thus turn to the TIL questions presented by this case.