Insurance Law Commons^™

Employment Practices Liability Insurance And Ex Post Moral Hazard, Joni Hersch, Erin E. Meyers

Vanderbilt Law School Faculty Publications

Many businesses purchase Employment Practices Liability Insurance (EPLI), a form of insurance that protects them from claims of discrimination, harassment, retaliation, and wrongful termination. But critics of EPLI argue that allowing insurance coverage for employment liability detracts from employment law's goal of deterrence and from notions of justice. We assess the validity of these criticisms by examining the nature of employment law claims and by reviewing characteristics of the current EPLI market. We find that past critiques miss the mark in diagnosing EPLI's major problem.

The EPLI market, for the most part, functions in a way that poses little to …

Sharing The Costs Of Artificial Intelligence: Universal No-Fault Social Insurance For Personal Injuries, Jin Yoshikawa

Vanderbilt Journal of Entertainment & Technology Law

The twenty-first century is the artificial intelligence (AI) century. In the past few years, AI has become a familiar fixture of everyday life thanks to services like YouTube, Spotify, Netflix, and Alexa. Stocktraders, doctors, insurance brokers, real estate agents, recruiters, artists,and even lawyers now rely on predictive tools powered by AI to perform their highly skilled--even creative--tasks. In the following decades, AI will continue to transform more fields and deliver astonishing advancements in convenience, comfort, safety, and security. At the same time, however, AI will bring about new challenges. AI will offend, disrupt, crash, breach, incite, injure, and even kill …

Insurance Coverage Policies For Pharmacogenomic And Multi-Gene Testing For Cancer, Ellen Wright Clayton, Christine Y. Lu, Stephanie Loomer, Et Al.

Vanderbilt Law School Faculty Publications

Abstract: Insurance coverage policies are a major determinant of patient access to genomic tests. The objective of this study was to examine differences in coverage policies for guideline-recommended pharmacogenomic tests that inform cancer treatment. We analyzed coverage policies from eight Medicare contractors and 10 private payers for 23 biomarkers (e.g., HER2 and EGFR) and multi-gene tests. We extracted policy coverage and criteria, prior authorization requirements, and an evidence basis for coverage. We reviewed professional society guidelines and their recommendations for use of pharmacogenomic tests. Coverage for KRAS, EGFR, and BRAF tests were common across Medicare contractors and private payers, but …

Assessing The Insurance Role Of Tort Liability After Calabresi, W. Kip Viscusi, Joni Hersch

Vanderbilt Law School Faculty Publications

Calabresi’s theory of tort liability (1961) as a risk distribution mechanism established insurance as an objective of tort liability. Calabresi’s risk-spreading concept of tort has provided the impetus for much of the subsequent development of tort liability doctrine, including risk-utility analysis and strict liability. Calabresi’s analysis remains a powerful basis for modern tort liability. However, high transactions costs, correlated risks, catastrophic losses, mass toxic torts, shifts in liability rules over time, noneconomic damages, and punitive damages affect the functioning of tort liability as an insurance mechanism. Despite some limitations of tort liability as insurance, tort compensation serves both a compensatory …

The Benefits Of Mortality Risk Reduction: Happiness Surveys Vs. The Value Of A Statistical Life, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

A principal component of many benefit-cost analyses (BCAs) of health, safety, and environmental regulations is the valuation of the fatality risk effects of the underlying policy. Government agencies currently value these expected effects using estimates of the value of a statistical life (VSL), that is, the tradeoff rate between money and very small risks of death. This measure corresponds to BCA's theoretically appropriate benefits measure, which is society's willingness to pay for the risk reduction. Here, I will review the VSL approach, compare it to suggested alternatives that use happiness measures of well-being, and address some of the misunderstandings that …

Catastrophic Oil Spills And The Problem Of Insurance, Kenneth S. Abraham

Vanderbilt Law Review

The BP oil spill of 2010 focused considerable attention on the operating conduct of BP, on the potential liability of BP and other entities associated with the spill, and on the fund that BP established to provide compensation to victims of the spill. Much less attention has been paid, however, to the nature and scope of insurance covering losses caused by catastrophic environmental disasters such as oil spills. BP's establishment of the Gulf Coast Claims Facility, and the compensation that will be paid by that facility, will likely dampen awareness of the mismatches between the resulting losses and the insurance …

Litigating Bp's Contribution Claims In Publicly Subsidized Courts: Should Contracting Parties Pay Their Own Way?, Bruce L. Hay, Christopher Rendall-Jackson, David Rosenberg

Vanderbilt Law Review

In this Article, we focus on an important problem involving mass-accident cases that was highlighted by the Deepwater Horizon litigation: overuse of courts to enforce contribution claims. These claims seek to shift incurred or expected liability and damages between the business and governmental entities that participated in the activity that gave rise to the mass-accident risk. Participants in such ventures generally have the option to determine by contract beforehand whether to subject themselves to contribution claims and, if so, whether such claims will be resolved by a publicly funded court or by a privately funded process, such as arbitration. Because …

Law Triangle: Arbitrating International Reinsurance Disputes, J. L. Murphy

Vanderbilt Journal of Transnational Law

The McCarran-Ferguson Act was enacted to preserve the longstanding prerogative of the States to regulate the insurance industry. States have acted in accordance with this statute to declare arbitration agreements in insurance contracts invalid. However, the Senate has since ratified the New York Convention and appended implementing legislation to the Federal Arbitration Act that obligates domestic courts to recognize arbitration agreements in all international contracts. In an odd convergence of authority, a functional conflict arises between these three bodies of law: the federal law says that state law controls in this area, even over other federal law that might incidentally …

The Montreal Convention: Can Passengers Finally Recover For Mental Injuries?, Mckay Cunningham

Vanderbilt Journal of Transnational Law

Since the 1920s, recovery for accidents suffered on international flights has been subject to the Warsaw Convention's limitation of "bodily injury." To address perceived inequities stemming from this limitation, some courts invoked a liberal interpretation of the phrase "bodily injury," and the resulting and fragmented judicial precedent threatened the treaty's goal of international uniformity. Although Warsaw's long-awaited replacement, the Montreal Convention, retains the "bodily injury" language, a close study of the treaty's history and, more importantly, the negotiations among the signatories' delegates suggests that the great majority of nations intended to broaden the allowable recovery beyond strict bodily injury and …

Rational Discounting For Regulatory Analysis, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

No abstract provided.

The Commodification Of Insurance Defense Practice, Herbert M. Kritzer

Vanderbilt Law Review

In this paper, I present an analysis of insurance defense practice using the heuristic of a commodity.7 Essentially, I argue that many, perhaps even most, insurance companies have come to view the more routine work of insurance defense as something to be purchased in a marketplace where there are a large number of interchangeable providers.8 Loyalty between buyer and seller, to the extent that it had been an important element of the relationship, has faded. Today, insurance companies frequently shop for the best deal, which may include producing insurance defense services in-house rather than purchasing those services from an outside …

Natural Disaster Risks: An Introduction, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

An introduction to a special issue of the Journal of Risk and Uncertainty dealing with the implications of catastrophic events for research on risk and uncertainty. What are the consequences of natural disasters? How do individuals and firms respond to such disasters? How do insurers respond, and how should the government respond? Several of these papers will have a strong normative component as they will suggest what actions individuals, firms, and the government should take in anticipation of natural disasters.

The Catastrophic Effects Of Natural Disasters On Insurance Markets, W. Kip Viscusi, Patricia Born

Vanderbilt Law School Faculty Publications

Natural catastrophes often have catastrophic risks on insurance companies as well as on the insured. Using a very large dataset on homeowners insurance coverage by state, by firm, and by year for the 1984 to 2004 period, this paper documents the positive effect on losses and loss ratios of both unexpected catastrophes as well as large events that the authors term "blockbuster catastrophes." Insurers adapt to these catastrophic risks by raising insurance rates, leading to lower loss ratios after the catastrophic event. There is a widespread event of unexpected catastrophes and blockbuster catastrophes that reduces total premiums earned in the …

Insurers, Illusions Of Judgment & Litigation, Chris Guthrie, Jeffrey J. Rachlinski

Vanderbilt Law School Faculty Publications

Insurers play a critical role in the civil justice system. By providing liability insurance to parties who would otherwise be untenable as defendants, insurers make litigation possible. Once litigation materializes, insurers provide representation, pay legal fees, and often play a central role in resolving disputes through settlement or adjudication. In this paper, we explore empirically how these key litigation players make important decisions in the litigation process, like evaluating a case, deciding whether to settle, and if so, on what terms. We find that insurers, though not entirely immune to the effects of cognitive illusions that have been shown to …

Taking One For The Team: Should Colleges Be Liable For Injuries Occurring During Student Participation In Club Sports?, Nick White

Vanderbilt Journal of Entertainment & Technology Law

Since the 1970s, colleges have not been liable for their adult students' actions or injuries, but courts have since delineated many exceptions to this rule. This Note will analyze the effect of college involvement in club sports as to whether it creates a duty for a college to protect its club athletes and those they might injure. This Note will also examine whether such a duty might exist in the future if the current trends in the law and college policy continue unchecked. Finally, this Note will address the effectiveness of the current defenses to liability and the effect of …

The Denominator Blindness Effect: Accident Frequencies And The Misjudgment Of Recklessness, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

People seriously misjudge accident risks because they routinely neglect relevant information about exposure. Such risk judgments affect both personal and public policy decisions, e.g., choice of a transport mode, but also play a vital role in legal determinations, such as assessments of recklessness. Experimental evidence for a sample of 422 jury-eligible adults indicates that people incorporate information on the number of accidents, which is the numerator of the risk frequency calculation. However, they appear blind to information on exposure, such as the scale of a firm's operations, which is the risk frequency denominator. Hence, the actual observed accident frequency of …

Why Traditional Insurance Policies Are Not Enough: The Nature Of Potential E-Commerce Losses & Liabilities, Anna Lee

Vanderbilt Journal of Entertainment & Technology Law

There are two general categories of insurance policies: first-party policies and third-party/liability policies. First-party polices provide benefits directly to policyholders for losses suffered by the policyholders. For example, fire damage to the policyholder's plant or financial loss resulting from the interruption of the policyholder's business would be covered under the first-party insurance. Generally, these first-party losses are covered under policies such as "all risk," "named peril," "business interruption," or "expense to reduce loss" coverages. Among these various types of first-party policies, "all risk" insurance policies provide the broadest coverages.

Third-party or liability policies provide protection for claims against the policyholder …

The Value Of Life In Legal Contexts: Survey And Critique, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

Value of life issues traditionally pertain to insurance of the losses of accident victims, for which replacement of the economic loss is often an appropriate concept. Deterrence measures of the value of life focus on risk-money tradeoffs involving small changes in risk. Using market data for risky jobs and product risk contexts often yields substantial estimates of the value of life in the range of $3 million to $9 million. These estimates are useful in providing guidance for regulatory policy and assessments of liability. However, use of these values to determine compensation, known as hedonic damages, leads to excessive insurance.

The Governmental Composition Of The Insurance Costs Of Smoking, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

The estimated health risks from smoking have significant external financial consequences for society. Studies at the national level indicate that cigarettes are selffinancing since external costs such as those due to illnesses are offset by cost savings associated with premature death, chiefly pension costs. This paper extends this analysis to all 50 states and considers the costs considered in the state attorneys general suits against the cigarette industry. Cigarettes are always self-financing from the standpoint of costs to each state. The extent of the cost savings is less than at the federal level. However, smokers' higher medical costs are outweighed …

Medical Malpractice Insurance In The Wake Of Liability Reform, W. Kip Viscusi, Patricia Born

Vanderbilt Law School Faculty Publications

This article examines the effect of the liability reforms on medical malpractice insurance over the 1984-91 period. This is the first study to use data by firm and by state for every firm writing medical malpractice insurance over that time period. The liability reforms increased insurance profitability (that is, decreased the loss ratios), where the main mechanism of influence was through decreasing losses. The quantile regression estimates imply that the greatest effects of liability reform are on the most unprofitable firms and that the effect is not uniform across the entire market. This pattern is consistent with the other principal …

The National Implications Of Liability Reforms For General Liability And Medical Malpractice Insurance, W. Kip Viscusi, Patricia Born

Vanderbilt Law School Faculty Publications

The stabilization of the insurance market may lead to lower prices for products and for medical care, but will also generally lead to lower values of tort awards as well. If the social objective was simply to reduce losses, then that objective could be achieved by abolishing tort liability altogether. Our societal concerns are clearly much broader. In the absence of a more detailed assessment of the desirability of the reforms and their effect on injured parties, it would be premature to conclude that reform efforts that were successful in enhancing insurance market profitability should be judged a success from …

Equivalent Frames Of Reference For Judging Risk Regulation Policies, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

Although the design of risk regulations has not yet attained what might be termed the economist's ideal of maximizing the difference between benefits and costs, substantial progress has been made in the design of regulatory policy. When the risk regulation agencies began their efforts in the early 1970s, there was widespread concern that something needed to be done to address the important risks that society faces. The substantial optimism with respect to our technological capabilities in reducing risk may have led to a failure to recognize the limits of our risk regulation ventures. Over time, there has been increasing emphasis …

The "Sudden And Accidental" Exception To The Pollution Exclusion Clause In Comprehensive General Liability Insurance Policies: The Gordian Knot Of Environmental Liability, Sharon M. Murphy

Vanderbilt Law Review

From 1973 to 1985, comprehensive general liability (CGL) insur- ance policies contained a pollution exclusion clause.' The plethora of litigation spawned by this clause, however, has done little to clarify either its meaning or its relationship to the policy as a whole.' Uncertainty regarding the scope of liability coverage under this clause drives many of the hazardous waste and toxic tort lawsuits filed. Courts have interpreted the pollution exclusion clause variously, often admitting that the law in this area is a confusing array of policy arguments and conflicting drafting histories. Part II of this Note sets forth the historical framework …

The Dimensions Of The Product Liability Crisis, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

Examination of a variety of sources of statistics indicates that the product liability crisis is real, and it is not simply imagined or contrived by the insurance industry. Litigation in the product liability area has escalated dramatically, but to some extent the industry was able to mute the effect of this escalation because of the influence of rising interest rates in the early 1980s as well as because the shrinking market for product liability insurance masked much of the explosion that was occurring in terms of the costs of product liability coverage. The dominant pattern in the early 1980s was …

The Performance Of Liability Insurance In States With Different Products-Liability Statutes, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

The liability crisis of the mid-1980s has led to an extensive reexamination of the liability system. A number of explanations have been offered for the substantial increase in insurance premiums and, in some cases, a decline in the availability of insurance. These include stimulation of the underwriting cycle by a decline in interest rates, collusion among insurance firms, rising tort costs, and uncertainty with respect to the liability burden.' Most observers, however, also point to changes in tort law itself. For example, plaintiffs may now have a more favorable environment for obtaining an award and, if they are successful, they …

Defining The Contours Of Erisa Preemption Of State Insurance Regulation: Making Employee Benefit Plan Regulation An Exclusively Federal Concern, Lawrence A. Vranka, Jr.

Vanderbilt Law Review

Congress enacted the Employee Retirement Income Security Act (ERISA) in 19741 to address problems in the area of employee pensions and benefits, with which prior federal enactments and complementary state regulation had been unable to cope. ERISA established a comprehensive scheme that placed the regulation of qualified employee benefit plans exclusively in federal hands.' The drafters of ERISA also sought to reserve to the states the power to regulate areas in which they traditionally had primacy--most notably, insurance, banking, and securities. The drafters of ERISA thus attempted to carve out an area of "exclusive federal concern," while preserving state regulation …

The Myth Of The Liability Insurance Claims Explosion: An Empirical Rebuttal, David J. Nye, Donald G. Gifford

Vanderbilt Law Review

A perceived crisis in the nation's liability insurance system erupted in 1986. Some businesses saw their insurance premiums double in a period of two years, and others found the coverages they required to-tally unavailable. While trial lawyers and consumer groups asserted that insurance company investment and pricing practices, as well as huge profits, had caused the crisis, others alleged that an increased"claims consciousness" among the American public had spawned the liability insurance affordability and availability problems. Richard Berman, a national representative of the United States Chamber of Commerce, proclaimed that the judicial system had "gone berserk" and that litigation was …

Insurance In The People's Republic Of China: Laws And Practice, Henry R. Zheng

Vanderbilt Journal of Transnational Law

The insurance industry in the People's Republic of China (PRC) has expanded rapidly during the past several years. Since the end of 1979 when domestic insurance was reestablished, the income generated from insurance business has been increasing at a rate of over forty-four percent annually.' By early 1987, over 500,000 enterprises and business entities utilized property insurance and about 34 million people purchased personal insurance; during the first half of 1986 the total insurance earnings from the People's Insurance Company of China alone reached a record high of over 2.33 billion yuan. In the meantime, the insurance business has become …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

RELIGIOUS ORGANIZATIONS AND MEMBERS OF CLERGY OF VARIOUS DENOMINATIONS LACK STANDING TO CHALLENGE ADOPTION AND IMPLEMENTATION OF DIPLOMATIC RELATIONS WITH THE VATICAN

--Americans United for Separation of Church and State v. Reagan, 786 F.2d 194 (3d Cir.1986)

===========

EVEN THOUGH PROCEEDINGS IN THE FOREIGN FORUM MAY TAKE MORE TIME AND MAY YIELD A SMALLER RECOVERY THAN PROCEEDING IN THE UNITED STATES FORUM, THE FOREIGN FORUM MAY BE CONSIDERED AN ADEQUATE FORUM FOR THE PURPOSES OF THE FORRUM NON CONVENIENS DOCTRINE

--De Melo v. Lederle Laboratories, 801 F.2d 1058 (8th Cir. 1986)

===============

ASSERTION OF PERSONAL JURISDICTION IN CALIFORNIA OVER AN …

Case Digest, Law Review Stafrf

Vanderbilt Journal of Transnational Law

Pursuant to the United States-France Estate Tax Treaty, the estate of a United States citizen who was domiciled in France is liable to the United States for taxes on real property located in France at rates effective when the citizen died provided the estate receives credit for the estate taxes paid to France

Norstar Bank of Upstate New York v. United States,644 F. Supp. 1112 (N.D.N.Y. 1986).

Political Question

Doctrine bars judicial consideration of claims that the United States mines placed in the Nicaraguan harbor of Corinto damaged a Norwegian ship. Krig-sforsikring for Skib, gjensidingforening (The Norwegian War Risk Insurance …