We granted certiorari in this case to consider whether the sale of memberships in automobile clubs constitutes the sale of insurance. The Court of Appeals held that it did not,1 but, for the reasons that follow, we conclude that it does. This conclusion means that we must also address whether the McCarran-Ferguson Act2 the “MFA” preempts the Federal Arbitration Act3 “FAA” and prohibits the enforcement of a clause in the parties’ loan agreement that requires any disputes to be resolved by arbitration. Because the application of the FAA would impair a statute of this State regulating the business of insurance, we conclude that the MFA preempts the FAA and prohibits the enforcement of the parties’ arbitration agreement. Accordingly, we reverse the judgment of the Court of Appeals. The appellee, The Money Tree, Inc., is licensed to make consumer loans under the Georgia Industrial Loan Act,4 and the appellants, Betty Love and Sabrina Hawkins-Bailey, are both customers of The Money Tree. A branch manager of one of The Money Tree stores who closed transactions with both of the appellants submitted an affidavit describing the transactions. He stated that, in addition to loan documents, which contained a provision providing arbitration in the event of a dispute between the parties, both appellants signed a document entitled “Voluntary Insurance Election Form.” The branch manager described this form as “our” form, thus indicating that the form was prepared by The Money Tree and not by an insurance company. The form provided an opportunity for the appellants to buy accidental death and dismemberment insurance and/or automobile club membership. Both appellants elected the automobile club membership with the Interstate Motor Club. The membership cost was financed by the Money Tree, and included in the loan documents signed by the appellants. The manager also stated that, at the time of the loan, he had the appellants sign membership agreements with the Interstate Motor Club.
Love and Hawkins-Bailey defaulted on their loans, and both were sued by The Money Tree in the Magistrate Court of Decatur County. The magistrate court entered a judgment against Hawkins-Bailey, and she appealed to the Superior Court of Decatur County. Love had her case transferred to superior court before a judgment was entered in magistrate court. In superior court, the appellants contended that Vance Martin is the president and sole owner of The Money Tree, Inc.; that William Martin is the vice-president; that Vance Martin owns 40 of the Interstate Motor Club, William Martin owns 20, and two children of Vance Martin own 40; that Vance Martin directs and controls the policies of both companies; that The Money Tree and the Interstate Motor Club share the same office; that the Interstate Motor Club is in the business of selling insurance, but that it does not have an insurance certificate; that in most, if not all, of The Money Tree’s loan transactions, it finances a charge for the Interstate Motor Club; that The Money Tree receives 60 of all auto club memberships and the Interstate Motor Club receives 40; that in the fiscal year 1998, The Money Tree received $701,428 on the sale of auto club memberships; and that The Money Tree, the Interstate Motor Club, and the Martins are engaged in a fraudulent scheme to force borrowers to purchase an auto club membership in order to receive a loan.
