Insurance Law Commons^™

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

Jeffrey J. Rachlinski

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 that have been shown to distort litigation decision making, appear to make decisions in a …

The Macroprudential Turn: From Institutional “Safety And Soundness” To “Systemic Stability” In Financial Supervision, Robert C. Hockett

Robert C. Hockett

This Working Paper is no longer available. The published version of this article is available at: http://scholarship.law.cornell.edu/facpub/1405/ Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, …

Beating The 'Wrap': The Agency Effort To Control Wraparound Insurance Tax Shelters, Charlene Luke

Charlene Luke

The first wraparound insurance tax shelter was marketed in the mid-1960s as a means for contract owners to exploit the inconsistency arising from the difference in the tax treatment of investment returns earned inside variable insurance contracts and the economically similar returns available outside such contracts. Federal income tax is deferred (and in some cases eliminated) on the income accruing inside variable insurance products - called inside buildup. In the most recent iteration of the wraparound insurance gambit, insurance companies wrapped private-placement, hedge-fund interests inside variable insurance products in order to allow contract owners to defer tax on the ordinary …

Taxing Risk: An Approach To Variable Insurance Reform, Charlene Luke

Charlene Luke

Variable life insurance and annuity contracts are susceptible to being marketed and sold to taxpayers for whom such contracts are unsuitable and to being used in wraparound insurance shelters. As a method of addressing these problems, I propose current taxation for the risky returns on these contracts but continued deferral for a deemed, risk-free return amount. The increased transparency resulting from the forced separate tax accounting of contract components should improve consumers' ability to receive adequate suitability evaluations and may also lead to lower fees. Current taxation of risk-related returns removes an apparently key shelter incentive and should make it …

Managing The Next Deluge: A Tax System Approach To Flood Insurance, Charlene Luke, Aviva Abramovsky

Charlene Luke

The National Flood Insurance Program (NFIP) has fallen short in fulfilling its promise as a social safety net for flood loss victims. In place of the NFIP, this Article proposes a mandatory social insurance plan that would harness the strengths of the federal taxing authority to provide basic relief for flood losses occurring at an individual’s primary residence. Any plan for addressing flood loss must navigate hotly debated, competing views about government intervention, redistribution, private markets, environmental protection, and property rights. This Article argues that government intervention in flood loss relief is inevitable, at least in the foreseeable future, and …

The Insurer's Right To Reimbursement Of Defense Costs, Robert H. Jerry Ii

Robert H. Jerry II

This article examines the theoretical justification for the insurer's asserted right to reimbursement of defense costs incurred in defending noncovered claims. It sketches some details about the duty to defend which are necessary prerequisites to exploring any claim to a right of reimbursement. It discusses the rationale offered by most courts and commentators for recognizing the right to reimbursement: under the law of restitution, the insurer who defends a noncovered claim bestows a benefit on the policyholder which, in justice, ought to be returned. The article offers an alternative justification; it explains that the insurer's right should be analyzed in …

The Insurance Aspects Of Damages, Robert H. Jerry Ii, Douglas R. Richmond

Robert H. Jerry II

"[I]t is difficult ... to imagine an event or transaction that does not involve insurance in some way." So it is with the most salient event in the lives of Tony and Donna Sabia, whose son Tony John Sabia, or "Little Tony," was born with profound disabilities. In the final analysis, the ability of Tony and Donna to pay for the future medical care and living expenses needed by their son depends on whether they can reach the liability insurance coverage possessed by the health care providers who attended Donna and Little Tony at the time of his birth. It …

The Antitrust Implications Of Collaborative Standard Setting By Insurers Regarding The Use Of Genetic Information In Life Insurance Underwriting, Robert H. Jerry Ii

Robert H. Jerry II

Whenever two or more market participants collaborate to restrain trade, the potential applicability of federal and state antitrust laws must be considered. When the collaborating parties are insurance companies, a further layer of analysis may be necessary to determine whether the activity is exempt from federal antitrust regulation. Even if the activity enjoys an exemption, state antitrust law may have different things to say about the activity. Embedded in each of these levels of analysis are many difficult and complex subsidiary questions. In short, the law of insurance antitrust is not a subject for the faint of heart. Antitrust law …

Regulating The Business Of Insurance: Federalism In An Age Of Difficult Risk, Robert Jerry, Steven Roberts

Robert H. Jerry II

Although the United States has not established a much-needed and increasingly discussed national catastrophe policy, most significant points in current risk management strategies involve significant federal coordination and control. The authors suggest that a regulatory model that defers to the states with respect to the regulation of the insurance aspects of difficult risks is no longer viable, and an enhanced federal role in insurance regulation specifically -- and in risk management more generally -- is both necessary and appropriate with respect to difficult risks.

May Harvey Rest In Peace: Lakin V. Postal Life And Casualty Company, Robert H. Jerry Ii

Robert H. Jerry II

There is a case that has piqued my interest in recent years. Lakin v. Postal Life & Casualty Co., is a relatively simple story of two men whose paths crossed in Kansas City, Missouri, more than forty years ago. One was a down-in-the-luck drifter, and the other a con-artist who made his living by taking advantage of others. These two men would be long forgotten but for the fact that their final interactions during a hunting trip near Pleasant Hill, Missouri, raised some insurance law issues that ultimately made their way to the Missouri Supreme Court. Lakin stands for the …

Bad Faith At Middle Age: Comments On “The Principle Without A Name (Yet),” Insurance Law, Contract Law, Specialness, Distinctiveness, And Difference, Robert H. Jerry Ii

Robert H. Jerry II

In this article, Robert Jerry expounds on Professor Abraham's article on insurer liability for bad faith by pointing out that the concept of institutional bad faith is not a new phenomenon, but rather, one that is as old as the insurance industry itself. Jerry focuses on Abraham's depiction of the "specialness" and "distinctiveness" of insurance, while exploring additional instances of "rotten to the core" systemic bad faith dating as far back as the nineteenth century. Much like Abraham did in his article on bad faith, Jerry uses these examples of systemic bad faith to further his assertion that the insurance …

Insurance, Terrorism, And 9/11: Reflections On Three Threshold Questions, Robert H. Jerry Ii

Robert H. Jerry II

For most of us, the collapse of the World Trade Center towers exists at the outermost edge of human comprehension. Even after one visits Ground Zero, the events of 9/11 retain a surreal quality, invoking feelings beyond words as one tries to contemplate losses immeasurable with numbers. Indeed, the insurance losses are insignificant when compared to the human tragedies caused by the terrorist attacks -- and in insurance terms, we witnessed the most costly, complex events to transpire in a single day in the history of the planet. Many years will pass before all the insurance ramifications of 9/11 are …

Cybercoverage For Cyber-Risks: An Overview Of Insurers' Responses To The Perils Of E-Commerce, Robert H. Jerry Ii, Michele L. Mekel

Robert H. Jerry II

Insurers' responses to the risks inherent in e-commerce and the demand for coverage have been anything but uniform. Instead, the solutions are a patchwork of stop-gap measures and niche offerings, including: (1) exclusions to coverage; (2) modifications to existing policies in order to extend or to limit coverage; and (3) the creation of new policies that specifically target Internet-related liabilities and losses. These various measures have been applied in both the first- and third-party settings. This article presents an overview of some of the risks involved in the new "e-economy" and surveys how insurers are responding to these new risks.

Mississippi River Stories: Lessons From A Century Of Unnatural Disasters, Christine A. Klein, Sandra B. Zellmer

Christine A. Klein

In the wake of Hurricane Katrina, the nation pondered how a relatively weak Category 3 storm could have destroyed an entire region. Few appreciated the extent to which a flawed federal water development policy transformed this apparently natural disaster into a "manmade" disaster; fewer still appreciated how the disaster was the predictable, and indeed predicted, sequel to almost a century of similar disasters. This Article focuses upon three such stories: the Great Flood of 1927, the Midwest Flood of 1993, and Hurricanes Katrina and Rita of 2005. Taken together, the stories reveal important lessons, including the inadequacy of engineered flood …

E-Discovery Business Impact: Response Plans And Insurance Coverage, Anne Tucker, Vjollca Prroni

Anne Tucker

No abstract provided.

Schlemmer V. Fireman's Fund Insurance Co.: A Case For Rethinking Arkansas' Choice-Of-Law Rule For Interstate Torts, L. Lynn Hogue

L. Lynn Hogue

No abstract provided.

Developing A Durable Right To Health Care, Erin C. Fuse Brown

Erin C. Fuse Brown

The Patient Protection and Affordable Care Act’s (ACA) signature accomplishment was the creation of a statutory right to health care for the uninsured. This is a momentous change in policy, addressing one of the most vexing social issues of our time and affecting millions of people and billions of dollars of the U.S. economy. This ambition and the degree of societal and political debate leading up to the Act’s passage suggests that it is a “superstatute,” a rare breed of statute that can, among other things, create rights and institutions more typically thought to be the province of constitutional undertaking. …

Systemic Risk Oversight And The Shifting Balance Of State And Federal Authority Over Insurance

Patricia A. McCoy

The presentation explored the implications of systemic risk regulation for the allocation of authority for state and federal insurance regulation.

Following English Footsteps? An Empirical Study Of Singapore's Reported Insurance Judgments And Disputes Between 1965 And 2012, Christopher Chao-Hung Chen

Christopher Chao-hung Chen

This article presents an empirical study of the development of Singapore’s insurance contract law in relation to English law. The gene of Singapore’s insurance law is very English. The empirical data show a lack of momentum in driving insurance law forward by case law. This may justify further legislative reform to address not only the known doctrinal issues inherited from English law but also the specific problems facing consumer insurance. Singapore’s competitiveness in the global insurance market will be an instrumental factor to determine how far Singapore continues to follow English law in the future.

Measuring The Transplantation Of English Commercial Law In A Small Jurisdiction: An Empirical Study Of Singapore’S Insurance Judgments Between 1965 And 2012, Christopher Chen

Christopher Chao-hung CHEN

This article seeks to measure the development of law after transplanting common law and statutes from another country by conducting an empirical study of the citation of precedents and demography of disputes of insurance cases in Singapore. This article recognizes that there are justifications for Singapore to transplant English insurance law. However, this research shows that the transplantation of English commercial law into a small jurisdiction, even within the common law family, may cause the law to be in a static state if courts do not have enough cases to maintain the development of law or to consider new development …

“The Protective Function Of Automobile Insurance From The Perspective Of Judicial Adjudication

Patricia A. McCoy

This talk explored the social tensions between making mandatory auto insurance affordable and the solvency of those insurance plans.

Judicial Broken-Field Running Perl V. St. Paul Fire & Marine Ins. Co., John F. Dobbyn

John Dobbyn

No abstract provided.

Moderator, Big Data And The Paradigm Of Insurance

Patricia A. McCoy

Moderated a panel on the theoretical paradigm of big data and insurance.

Market Conduct Supervisors And Their Interactions With Prudential Authorities

Patricia A. McCoy

This presentation addressed potential commonalities and conflicting interests of market conduct and prudential supervisors.

A Preliminary Look At State Structures For Regulating Financial Services, Elizabeth F. Brown

Elizabeth F Brown

Within the past thirty-five years approximately fifty nations have consolidated their financial regulatory agencies into either a single integrated agency or into two semi-integrated agencies. The United States has resisted this trend, due in part to a concern that the costs of such significant consolidation would exceed its benefits. The existing studies that compare the costs of the consolidated regulators around the world with the United States regime have often been discounted because they have been unable to control for differences in culture and regulatory intensity between those other countries and the United States. This article attempts to address this …

Public Policy Considerations Concerning Insurance Bad Faith And Residual Market Mechanisms, Chad G. Marzen

Chad G. Marzen

The question of whether first-party insurance bad faith liability should be extended upon a state-run property insurer is an unresolved one in many jurisdictions. This article contributes to the contemporary literature regarding bad faith in insurance by comprehensively analyzing the history of, the nature of the claims associated with, and public policies concerning the imposition of bad faith liability upon state-run property insurers. This article makes it contribution by arguing the courts should not impose first-party bad faith liability on state-run property insurers who operate in the residual property insurance market.

You Want Insurance With That? Using Behavioral Economics To Protect Consumers From Add-On Insurance Products, Tom Baker, Peter Siegelman

Peter Siegelman

No abstract provided.

The Optimal Resolution Of Intra-Policy Um/Uim Stacking, Christopher Robinette, Jessica Smeriglio

Christopher J Robinette

Comentarios Sobre La Regulación De La Prescripción En La Ley Del Contrato De Seguro, Carlos Augusto Acosta Olivo, Pedro Eduardo Richter Valdivia

Carlos Augusto Acosta Olivo

Los autores abordan de manera crítica el desarrollo de la institución de la prescripción en la “Nueva Ley del Contrato de Seguro”, para lo cual, partiendo de un análisis de las actuales tendencias legislativas existentes en el Derecho Comparado, identifican los vacíos legales así como los problemas aplicativos que se pueden generar de mantenerse un plazo de prescripción “largo”, concluyendo que urge una necesaria (y lamentablemente prematura) revisión y modificación del actual texto normativo.

Gambling On Our Financial Future: How The Federal Government Fiddles While State Common Law Is A Safer Bet To Prevent Another Financial Collapse, Brian M. Mccall

Brian M McCall