What act establishes that insurance transactions should be regulated by the states?

The McCarran-Ferguson Act is the piece of legislation that establishes the premise that the states have the authority to regulate insurance transactions. Enacted in 1945, this act recognizes that individual states are better suited to regulate the insurance industry due to its local nature and the varying needs of its citizens. It provides that federal law can only intervene in matters of insurance when it's specifically intended to do so, which allows states to maintain control over aspects such as rate setting, licensing, and market conduct.

The Glass-Steagall Act primarily deals with the separation of commercial and investment banking and is unrelated to insurance regulation. The Gramm-Leach-Bliley Act focuses on financial services modernization, allowing institutions to offer both banking and securities services but does not set forth regulations specific to insurance. The Affordable Care Act is primarily concerned with health care reform and does not address the regulation of insurance in a broad sense. Therefore, the McCarran-Ferguson Act stands out as the key legislation assigning regulatory authority over insurance transactions to the states.