Law | Open Access Articles | Digital Commons Network™

Dual Regulation Of Insurance, Christopher French

Christopher C. French

Since this country was created, the insurance industry has been principally

regulated by the states with infrequent Congressional interventions.

As the insurance industry has evolved in recent decades, however, individual

states have become unable to adequately regulate some insurers, such

as multinational insurers and foreign insurers, because they lack jurisdiction

over such entities. Simply having the federal government assume responsibility

for regulating insurers will not solve the current regulatory

problems, however, because Congress’ past forays into regulating certain

areas of insurance generally have yielded poor results. Consequently, this

Article makes the novel proposal and argument that, with the creation of …

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English Justice For An American Company?, Christopher French

Christopher C. French

This Essay addresses the Halliburton Co. v. Chubb Bermuda Insurance Ltd. case, which is pending before England's Supreme Court. The issue before the Court is whether it is appropriate for the "neutral" arbitrator, who has a history of serving as a party-appointed arbitrator for Chubb, to serve as the "neutral" arbitrator in the matter while simultaneously serving as a party-appointed arbitrator for Chubb in another related arbitration proceeding involving the same insurance policy form and the same underlying Deepwater Horizon incident. The lower courts declined to remove the arbitrator. The Essay also addresses the question of whether London arbitration proceedings …

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Insuring Against Cyber Risk: The Evolution Of An Industry (Introduction), Christopher French

Christopher C. French

Cyber risks are the newest risks of the 21st century. The breadth and cost of cyber attacks are astonishing. Worldwide damages caused by cyber attack are predicted to reach $6 trillion by 2021. Between 2015 and 2017, ransomware damages alone increased from $325 million to approximately $5 billion. In 2017, WannaCry ransomware shut down over 300,000 computer systems across 150 countries.

On April 13, 2018, the Penn State Law Review held a symposium to discuss the evolution of cyber risks and cyber insurance. The symposium was comprised of an eclectic group of legal practitioners and scholars who presented four articles. …

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Hurricanes, Fraud, And Insurance: The Supreme Court Weighs In On, But Does Not Wade Into, The Concurrent Causation Conundrum In State Farm Fire And Casualty Company V. Rigsby, Chris French

Christopher C. French

In the December 6, 2016 Supreme Court decision, State Farm v. Rigsby, a homeowner’s house was damaged by Hurricane Katrina. The homeowner had homeowners insurance with State Farm and a flood insurance policy that was administered by State Farm on behalf of the federal government. The claims adjusters assigned by State Farm to handle the homeowner’s claim allegedly were instructed by State Farm to misclassify wind damage as flood damage in order to shift State Farm’s own liability for the loss to the federal government. The claims handlers filed a lawsuit against State Farm under the False Claims Act (FCA), …

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Insuring Takings Claims, Christopher Serkin

Christopher Serkin

Local governments typically insure themselves against all kinds of losses, from property damage to legal liability. For small- and medium-sized governments, this usually means purchasing insurance from private insurers or participating in municipal risk pools. Insurance for regulatory takings claims, however, is generally unavailable. This previously unnoticed gap in municipal insurance coverage could lead risk averse local governments to underregulate and underenforce existing regulations where property owners threaten to bring takings claims. This seemingly technical observation turns out to have profound implications for theoretical accounts of the Takings Clause that focus on government regulatory incentives. This Article explores the impact …

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Understanding Insurance Policies As Noncontracts: An Alternative Approach To Drafting And Construing These Unique Financial Instruments, Christopher French

Christopher C. French

Insurance policies commonly are understood to be a species of standardized contracts. This Article challenges that conventional wisdom and argues that insurance policies do not actually qualify as contracts under the doctrinal and theoretical bases of contract formation. It examines the process by which insurance policies are created and sold, and measures that process against the requirements for contract formation. This Article also distinguishes insurance policies from other types of standardized contracts, such as wrap agreements, which currently are the subject of much litigation and scholarly commentary. It then explores the doctrinal and theoretical bases underlying the specialized rules that …

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Insurance Policies: The Grandparents Of Contractual Black Holes, Christopher French

Christopher C. French

In their recent article, The Black Hole Problem in Commercial Boilerplate, Professors Stephen Choi, Mitu Gulati, and Robert Scott identify a phenomenon found in standardized contracts they describe as “contractual black holes.” The concept of black holes comes from theoretical physics. Under the original hypothesis, the gravitational pull of a black hole is so strong that once light or information is pulled past an event horizon into a black hole, it cannot escape. In recent years, the theory has been reformulated and now the hypothesis is that some information can escape, but it is so degraded that it is virtually …

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Sex, Videos, And Insurance: How Gawker Could Have Avoided Financial Responsibility For The $140 Million Hulk Hogan Sex Tape Verdict, Christopher French

Christopher C. French

On March 18, 2016, and March 22, 2016, a jury awarded Terry Bollea (a.k.a Hulk Hogan) a total of $140 million in compensatory and punitive damages against Gawker Media for posting less than two minutes of a video of Hulk Hogan having sex with his best friend’s wife. The award was based upon a finding that Gawker intentionally had invaded Hulk Hogan’s privacy by posting the video online. The case has been receiving extensive media coverage because it is a tawdry tale involving a celebrity, betrayal, adultery, sex, and the First Amendment. The case likely will be remembered by most …

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The Insurability Of Claims For Restitution, Christopher French

Christopher C. French

Does and should a wrongdoer’s liability insurance cover an aggrieved party’s claim for restitution (e.g., a claim for the disgorgement of ill-gotten gains)? This article answers those questions. It does so by first answering the question of whether claims for restitution are covered under the terms of liability insurance policies. Then, after concluding that they are, it addresses the question of whether claims for restitution should be insurable as a matter of public policy and insurance law theory. There are long-standing legal and equitable principles that, on the one hand, dictate that a wrongdoer should not be allowed to benefit …

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The Insurability Of Claims For Restitution, Christopher French

Christopher C. French

Does and should a wrongdoer’s liability insurance cover an aggrieved party’s claim for restitution (e.g., a claim for the disgorgement of ill-gotten gains)? This article answers those questions. It does so by first answering the question of whether claims for restitution are covered under the terms of liability insurance policies. Then, after concluding that they are, it addresses the question of whether claims for restitution should be insurable as a matter of public policy and insurance law theory. There are long-standing legal and equitable principles that, on the one hand, dictate that a wrongdoer should not be allowed to benefit …

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Competition And Regulation In The Insurance Sector: Reassessing The Mccarran-Ferguson Act, Susan Beth Farmer

Susan Beth Farmer

This article was presented at a symposium entitled “Public and Private: Are the Boundaries in Transition?” sponsored by the American Antitrust Institute on June 24, 2010. It proposes a different paradigm, which more precisely describes regulation and competition in the insurance sector. This relationship is the shifting boundary between state and federal regulation instead of a boundary between the public and private sectors. The McCarran-Ferguson Act was adopted to protect firms acting in the business of insurance from federal antitrust scrutiny, but its language and impact goes far beyond federal competition law. So broad is the exemption that the modern …

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A Battlefield Map For Nfl V. Insurance Industry Re: Concussion Liabilities, Christopher French

Christopher C. French

When the superstar athlete -“Iron Mike” Webster - a 9-time National Football League (NFL) Pro Bowler, 4-time Super Bowl Champion, Hall of Fame center for the Pittsburgh Steelers died at age 50 with severe brain dysfunction after becoming homeless and living in a truck, it was discovered he had a previously nameless disease, Chronic Traumatic Encephalopathy (CTE). The discovery of CTE opened the floodgates on interest in delayed manifestation brain diseases caused by repeated blows to the head. As part of that flood, numerous class actions were brought by retired NFL football players against the NFL for their alleged …

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Revisiting Construction Defects As “Occurrences” Under Cgl Insurance Policies, Christopher French

Christopher C. French

Imagine a situation in which a homeowner hires a contractor to redo a bathroom, for example, and the work is done incompetently such that the plumbing leaks and causes damage to other parts of the house. If the homeowner sues the contractor to recover the costs of repairing the faulty workmanship and the damage caused by the faulty workmanship, has there been an “occurrence” that is covered by the contractor’s Commercial General Liability (“CGL”) insurance policy? This article provides an answer to that question.

The issue of whether construction defects are occurrences under CGL insurance policies has been litigated frequently …

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Insuring Landslides: America’S Uninsured Natural Catastrophes, Christopher French

Christopher C. French

Landslides occur in all fifty states and cause approximately $3.5 billion in property damage annually. Yet, in America, “all risk” homeowners and commercial property insurance policies exclude coverage for landslides, and there is only limited availability of expensive, stand-alone “named peril” insurance policies that cover landslide losses. Consequently, the affected homeowners are often left financially devastated—homeless with a mortgage to pay on an unsaleable piece of property.

This Article analyzes the problem of insuring landslide losses in America and proposes ways to help solve it. It describes both historical and recent landslide events. It discusses the insurance industry’s response to …

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Insuring Floods: The Most Common And Devastating Natural Catastrophies In America, Christopher French

Christopher C. French

Flooding is the most common natural catastrophe Americans face, accounting for 90% of all damage caused by natural catastrophes. Hurricanes Katrina and Sandy, for example, collectively caused over $160 billion in damage, but only approximately 10% of the Hurricane Katrina victims and 50% of the Hurricane Sandy victims had insurance to cover their flood losses. Consequently, both their homes and lives were left in ruins in the wake of the storms. Nationwide, only approximately 7% of homeowners have insurance that covers flood losses even though the risk of flooding is only increasing as coastal areas continue to be developed and …

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The Uneasy Case For Food Safety Liability Insurance, John Aloysius Cogan Jr.

John Aloysius Cogan Jr.

Foodborne illnesses sicken millions and kill thousands of Americans every year. Our dysfunctional government food safety system appears incapable of protecting us, leading some to look to the private market for solutions to our food safety crisis. One private market approach, food safety liability insurance, is gaining popularity. This Article questions the emerging view that liability insurance can supplement government regulation of food safety. This article takes a more comprehensive approach than previous scholarship by systematically addressing the shortcomings of liability insurance as a regulator of food safety from three distinct perspectives: (1) an economics of information framework, (2) an …

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The Role Of The Profit Imperative In Risk Management, Christopher French

Christopher C. French

Risks in the world abound. Every day there is a chance that each of us could be in a car accident. Or, one of us could be the victim of a tornado, flood or earthquake. Every day someone becomes deathly ill from an insidious disease. Our properties are in constant peril—one’s house could catch fire at any time or a tree could fall on it during a storm. Any one of these events could have devastating financial consequences, and they are just a few of the many risks that impact our daily lives. One of the principal ways we manage …

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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.

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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 …

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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.

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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.

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

Christopher J Robinette

This article presents the uncertainty and inefficiency across the jurisdictions in intra-policy UM/UIM stacking in personal line automobile insurance policies and recommends a specific solution. Part II provides a brief description of UM/UIM coverage and stacking in general, and Part III delves into the complex issues surrounding UM/UIM stacking today, breaking down the factors and arguments specific to intra-policy and inter-policy stacking. Part IV discusses five general approaches states have taken towards stacking, including three different case examples specific to intra-policy stacking. Part V includes our recommendations for handling intra-policy stacking, followed by the conclusion in Part VI.

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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

Many politicians and commentators agree that credit default swaps (CDS) played a significant role in the financial crisis of 2008. Yet, few who observe this role are aware that CDS were set loose on the economy by the federal pre-emption of thousands of years of public policy. Since the time of Aristotle law, philosophy and public policy have been hostile to gambling. Viewed as a socially unproductive zero sum wealth transfer, the law has generally refused to permit parties to use the courts to enforce wagers. Courts and legislatures worked in harmony to control and in some cases punish financial …

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Application Of The Antitrust Laws To The Activities Of Insurance Companies: Heavier Risks, Expanded Coverage, And Greater Liability, Joseph Bauer, Earl W. Kintner, Michael J. Allen

Joseph P. Bauer

Since 1945 Congress has exempted certain activities of insurance companies from federal antitrust scrutiny. This exemption, provided by the McCarran-Ferguson Act, is not unqualified; it only applies to insurance company activities that constitute the "business of insurance" and that already are regulated under state law. Moreover, the exemption does not apply to activities that involve boycotts, coercion, or intimidation. The purpose of this exemption was to preserve the long tradition of state regulation of insurance, while providing federal remedies for coercive anticompetitive activities. The authors examine recent Supreme Court interpretations of the Act in light of this legislative policy and …

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Miller V. Commissioner: Deductibility Of Casualty Losses After Voluntary Election Not To File An Insurance Claim, Stephen J. Dunn, Robert H. Kurnick, Matthew J. Barrett

Matthew J. Barrett

Taxpayers who suffer casualty losses may decide, for a variety of reasons, not to file an insurance claim for recovery of those losses. Section 165 of the Internal Revenue Code of 1954 allows a deduction for “any loss sustained during the taxable year and not compensated for by insurance or otherwise.”' Consequently, the question arises whether a taxpayer may claim a casualty loss deduction even though the taxpayer did not seek insurance reimbursement for the loss. In Miller v. Commissioner, the United States Court of Appeals for the Sixth Circuit, in a 6-5 en banc decision, expressly overruled its previous …

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The Law & Economics Of Liability Insurance, Tom Baker, Peter Siegelman

Peter Siegelman

No abstract provided.

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Segmented Settlements Are Not The Answer: A Response To Professor Squire’S Article, How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Christopher C. French

Christopher C. French

In his recent article, Professor Richard Squire offers a provocative theory in which he claims the underlying claimants in shareholder litigation against corporate policyholders are overcompensated due to what he describes as “cramdown” settlements, under which insurers are forced to settle due to the “duty to contribute” that arises under multi-layered directors and officers (“D&O”) insurance programs. He also offers a novel idea regarding how this problem could be fixed by what he refers to as “segmented” settlements in which each insurer and the policyholder would be allowed to settle separately and consider only its own interests in doing so. …

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The “Ensuing Loss” Clause In Insurance Policies: The Forgotten And Misunderstood Antidote To Anti-Concurrent Causation Exclusions, Chris French

Christopher C. French

As a result of the 1906 earthquake and fire in San Francisco which destroyed the city, a clause known as the “ensuing loss” clause was created to address concurrent causation situations in which a loss follows both a covered peril and an excluded peril. Ensuing loss clauses appear in the exclusions section of such policies and in essence they provide that coverage for a loss caused by an excluded peril is nonetheless covered if the loss “ensues” from a covered peril. Today, ensuing loss clauses are found in “all risk” property and homeowners policies, which cover all losses except for …

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The “Non-Cumulation Clause”: An “Other Insurance” Clause By Another Name, Chris French

Christopher C. French

How long-tail liability claims such as asbestos bodily injury claims and environmental property damage claims are allocated among multiple triggered policy years can result in the shifting of tens or hundreds of millions of dollars from one party to another. In recent years, insurers have argued that clauses commonly titled, “Prior Insurance and Non-Cumulation of Liability” (referred to herein as “Non-Cumulation Clauses”), which are found in commercial liability policies, should be applied to reduce or eliminate their coverage responsibilities for long-tail liability claims by shifting their coverage responsibilities to insurers that issued policies in earlier policy years. The insurers’ argument …

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Debunking The Myth That Insurance Coverage Is Not Available Or Allowed For Intentional Torts Or Damages, Christopher French

Christopher C. French

Over the years, a myth has developed that insurance coverage is not available or allowed for intentional injuries or damage. This myth has two primary bases: one, the “fortuity” doctrine, which provides that insurance should only cover losses that happen by chance; and two, public policy, which allegedly disfavors allowing insurance for intentional injuries or damage. This article dispels that myth. Many types of liability insurance policies expressly cover intentional torts including trademark infringement, copyright infringement, invasion of privacy, defamation, disparagement, and improper employment practices such as discrimination. In addition, punitive damages, which typically are awarded for intentional misconduct, are …

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Full-Text Articles in Law

Dual Regulation Of Insurance, Christopher French

Christopher C. French

English Justice For An American Company?, Christopher French

Christopher C. French

Insuring Against Cyber Risk: The Evolution Of An Industry (Introduction), Christopher French

Christopher C. French

Hurricanes, Fraud, And Insurance: The Supreme Court Weighs In On, But Does Not Wade Into, The Concurrent Causation Conundrum In State Farm Fire And Casualty Company V. Rigsby, Chris French

Christopher C. French

Insuring Takings Claims, Christopher Serkin

Christopher Serkin

Understanding Insurance Policies As Noncontracts: An Alternative Approach To Drafting And Construing These Unique Financial Instruments, Christopher French

Christopher C. French

Insurance Policies: The Grandparents Of Contractual Black Holes, Christopher French

Christopher C. French

Sex, Videos, And Insurance: How Gawker Could Have Avoided Financial Responsibility For The $140 Million Hulk Hogan Sex Tape Verdict, Christopher French

Christopher C. French

The Insurability Of Claims For Restitution, Christopher French

Christopher C. French

The Insurability Of Claims For Restitution, Christopher French

Christopher C. French

Competition And Regulation In The Insurance Sector: Reassessing The Mccarran-Ferguson Act, Susan Beth Farmer

Susan Beth Farmer

A Battlefield Map For Nfl V. Insurance Industry Re: Concussion Liabilities, Christopher French

Christopher C. French

Revisiting Construction Defects As “Occurrences” Under Cgl Insurance Policies, Christopher French

Christopher C. French

Insuring Landslides: America’S Uninsured Natural Catastrophes, Christopher French

Christopher C. French

Insuring Floods: The Most Common And Devastating Natural Catastrophies In America, Christopher French

Christopher C. French

The Uneasy Case For Food Safety Liability Insurance, John Aloysius Cogan Jr.

John Aloysius Cogan Jr.

The Role Of The Profit Imperative In Risk Management, Christopher French

Christopher C. French

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

Robert H. Jerry II

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

Robert H. Jerry II

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

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

Peter Siegelman

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

Christopher J Robinette

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

Application Of The Antitrust Laws To The Activities Of Insurance Companies: Heavier Risks, Expanded Coverage, And Greater Liability, Joseph Bauer, Earl W. Kintner, Michael J. Allen

Joseph P. Bauer

Miller V. Commissioner: Deductibility Of Casualty Losses After Voluntary Election Not To File An Insurance Claim, Stephen J. Dunn, Robert H. Kurnick, Matthew J. Barrett

Matthew J. Barrett

The Law & Economics Of Liability Insurance, Tom Baker, Peter Siegelman

Peter Siegelman

Segmented Settlements Are Not The Answer: A Response To Professor Squire’S Article, How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Christopher C. French

Christopher C. French

The “Ensuing Loss” Clause In Insurance Policies: The Forgotten And Misunderstood Antidote To Anti-Concurrent Causation Exclusions, Chris French

Christopher C. French

The “Non-Cumulation Clause”: An “Other Insurance” Clause By Another Name, Chris French

Christopher C. French

Debunking The Myth That Insurance Coverage Is Not Available Or Allowed For Intentional Torts Or Damages, Christopher French

Christopher C. French