## Facts

- Congress authorized qualifying national banks located in towns with populations of 5,000 or fewer to act as agents for insurance companies by soliciting and selling insurance, subject to Comptroller of the Currency regulations.  
- Florida enacted a statute generally prohibiting insurance agency activities by agents associated with financial institutions, with a narrow exception effectively allowing only certain unaffiliated small-town banks to sell insurance.  
- Barnett Bank, a national bank affiliated with a bank holding company and operating a branch in a qualifying small town, purchased a Florida-licensed insurance agency.  
- Florida’s Insurance Commissioner ordered the agency to stop selling insurance based on the Florida statute.  
- Barnett sought declaratory and injunctive relief in federal court, arguing the federal banking statute preempted Florida’s restriction.  
- The district court and the Eleventh Circuit rejected preemption, relying on the McCarran–Ferguson Act’s rule limiting federal displacement of state insurance regulation.  

## Issues

1. Whether the McCarran–Ferguson Act bars preemption because the federal banking statute does not “specifically relate[] to the business of insurance.”  
2. If McCarran–Ferguson does not bar preemption, whether the federal statute authorizing certain national banks to sell insurance preempts Florida’s prohibition as applied to national banks in qualifying small towns.  

## Decision

- The Supreme Court reversed the Eleventh Circuit.  
- The McCarran–Ferguson Act did not prevent preemption because the federal statute specifically related to the business of insurance by expressly authorizing national banks to act as insurance agents.  
- Applying conflict-preemption principles, the Florida statute was preempted to the extent it barred national banks from selling insurance where federal law authorized that activity.  
- The Court explained that state law is preempted when it prevents or significantly interferes with a national bank’s exercise of federally granted powers.  

## Legal Principles

- McCarran–Ferguson preserves state insurance regulation from federal displacement unless the federal statute “specifically relates to the business of insurance.”  
- A federal statute that expressly authorizes insurance agency activity by national banks “specifically relates” to insurance for McCarran–Ferguson purposes.  
- State law is preempted where it prevents or significantly interferes with a national bank’s exercise of its powers granted by federal law.  
- When federal law affirmatively authorizes national banks to engage in an activity and state law forbids it, the state prohibition is an obstacle to federal objectives and is preempted.  

## Conclusion

The Court held that the federal statute authorizing certain national banks to sell insurance in small towns preempted Florida’s contrary restriction, and that McCarran–Ferguson did not shield the state law because the federal authorization specifically related to the business of insurance.


Barnett Bank of Marion Cnty., N.A. v. Nelson, 517 U.S. 25 (1996)