In the United States, government has exercised perhaps as much if not more control over the business of insurance than any other private business activity. Initially, in the 1800s, regulatory control was exercised exclusively at the state level. Such control received constitutional sanction by the United States Supreme Court in 1869. Even with Supreme Court recognition of federal authority in 1944, primary regulatory control of insurance continued to remain with the states.

When the Supreme Court upheld the power of the Kansas Insurance Commissioner to regulate insurance rates in 1914, it pronounced that insurance is affected with the public interest. What is this "public interest" giving rise to extensive legislative, regulatory, and ongoing political attention? Three basic reasons are considered here: (1) numbers affected, (2) nature of insurance and (3) imbalance of bargaining power.