Which statement about state licensure laws and federal preemption is true?

• A. State licensure laws are fully preempted by federal law.
• B. State licensure laws may be preempted depending on circumstances.
• C. State licensure laws are not preempted and must be followed.
• D. Licensure requirements vary by product type.

Answer: (C)

Federal preemption isn’t automatic, and licensing insurance products and professionals is a state-regulated function. The McCarran-Ferguson Act preserves state regulation of the business of insurance, so unless a federal law clearly preempts it or fully occupies the field, state licensure rules remain in effect. While there are federal contexts that interact with insurance—such as ERISA governing plan administration—the act of licensure itself isn’t automatically overridden by federal statutes. In practice, licensure requirements are part of state consumer protection and professional standards, and they must be followed. That’s why the statement that state licensure laws are not preempted and must be followed is the most accurate general rule.