Department of Treasury v. Fabe, 508 U.S. 491, 27 (1993)

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Cite as: 508 U. S. 491 (1993)

Kennedy, J., dissenting

policyholder and insurance company relationship as to constitute the business of insurance. Pireno considers: "[F]irst, whether the practice has the effect of transferring or spreading a policyholder's risk; second, whether the practice is an integral part of the policy relationship between the insurer and the insured; and third, whether the practice is limited to entities within the insurance industry." 458 U. S., at 129.

The Ohio statute here does not qualify as regulating the business of insurance under Pireno's tripartite test for the same reason that it fails to do so under National Securities: It regulates an activity which is too removed from the contractual relationship between the policyholder and the insurance company. First, the risk of insurer insolvency addressed by the statute is distinct from the risk the policy-holder seeks to transfer in an insurance contract. The transfer of risk from insured to insurer is effected "by means of the contract between the parties—the insurance policy— and that transfer is complete at the time that the contract is entered." Id., at 130. As to the second prong, the Ohio statute does not regulate the relationship between the insured and the insurer, but instead addresses the relationship among all creditors the insurer has left in the lurch. Finally, it is plain that the statute is not limited to entities within the insurance industry. The statute governs the rights of all creditors of insolvent insurance companies, including employees, general creditors, and stockholders, as well as government entities.

Quite apart from my disagreement with the majority over which of our precedents have relevance to the issue before us, I think the most serious flaw of its analytic approach is disclosed in the compromise holding it reaches. The Court comes to the conclusion that the Ohio insolvency statute is a regulation of the business of insurance only to the extent that policyholder claims (as well as administrative expenses necessary to facilitate the payment of those claims) are given priority ahead of the claims of the Federal Government. At

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