Cite as: 526 U. S. 358 (1999)
Opinion of the Court
sumed from delayed notice alone. The insurer must show actual prejudice, not the mere possibility of preju-dice." Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal. App. 4th 715, 760-761, 15 Cal. Rptr. 2d 815, 845 (1st Dist. 1993) (citations omitted).
The parties agree that the notice-prejudice rule falls under ERISA's preemption clause, § 514(a), as a state law that "relate[s] to" an employee benefit plan.1 Their dispute hinges on this question: Does the rule "regulat[e] insurance" and thus escape preemption under the saving clause, § 514(b)(2)(A).2
Our precedent provides a framework for resolving whether a state law "regulates insurance" within the meaning of the saving clause. First, we ask whether, from a "common-sense view of the matter," the contested prescription regulates insurance. Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 740 (1985); see Pilot Life, 481 U. S., at 48. Second, we consider three factors employed to determine whether the regulation fits within the "business of insurance" as that phrase is used in the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U. S. C. § 1011 et seq.: "first, 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." Metropolitan Life,
1 Common-law rules developed by decisions of state courts are "State law" under ERISA. See 29 U. S. C. § 1144(c)(1) ("The term 'State law' includes all laws, decisions, rules, regulations, or other State action having the effect of law.").
2 State laws that purport to regulate insurance by "deem[ing]" a plan to be an insurance company are outside the saving clause and remain subject to preemption. See § 1144(b)(2)(B). Self-insured ERISA plans, therefore, are generally sheltered from state insurance regulation. See Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 747 (1985). Because this case does not involve a self-insured plan, this limitation on state regulatory authority is not at issue here.
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