Insurance Law Commons^™

Private Coverage, Public Risk: The Role Of Cyber Insurance In National Security Governance, Deborah L. Johnson

Faculty Publications

This Article explores the growing yet underexamined role of the commercial cyber insurance market in shaping the United States' approach to cybersecurity readiness. It argues that, as cyber threats against U.S. critical infrastructure and essential services increase, commercial cyber insurance has quietly come to function as a de facto governance tool in national cybersecurity. In hospitals, water and energy systems, and other public-facing sectors, policy language, underwriting questionnaires, and post-breach claims practices help define what counts as "reasonable" security, influence how organizations plan for and respond to incidents, and affect the pace and scope of recovery after an attack. Yet …

Artificial Intelligence, Judicial Evolution, And Insurance, Renee Henson

Faculty Publications

AI-driven platforms have the potential to inflict traditional injuries in new ways. Proprietary algorithms trained on large volumes of personal data can cause mental, emotional, and sometimes physical injuries via conversational exchanges, harmful content recommendations, and the promotion of extremist content. This "algorithmic liability" fundamentally challenges existing legal doctrines and statutory protections, thereby exposing deficiencies in current insurance coverage frameworks. 

Historically, courts dismissed algorithmic liability claims early in litigation, invoking Section 230 immunity and First Amendment protections, and resisted classifying algorithmic tools as "products" for the purposes of products liability law. Recent jurisprudence, however, signals a critical turning point. On …

Government-Backed Insurance For Artificial Intelligence Technologies, Renee Henson

Faculty Publications

Artificial intelligence (AI) is an unpredictable technology that has the capacity to both help and harm people. Although insurance plays a key role in compensating for harms in other contexts, AI-produced damages evade traditional principles of risk pricing which limits viable commercial insurance coverage. AI requires modified insurance systems that can compensate diverse and unpredictable losses. Just like AI, at one time nuclear energy was viewed as a new and profitable, yet wholly unpredictable, technology that had the capacity to cause devastating harm. AI poses similar threats to society in certain domains, including, for example, health care (e.g., risk management …

"I Am Become Death, The Destroyer Of Worlds": Applying Strict Liability To Artificial Intelligence As An Abnormally Dangerous Activity, Renee Henson

Faculty Publications

Artificial intelligence (AI)-enabled tools have produced a myriad of injuries, up to and including death. This burgeoning technology has caused scholars to ask questions, such as, How do we create a legal framework for AI? Because AI creators have acknowledged that even they do not know the capacities of their technology for good or bad outcomes, this Article argues that an existing framework, strict liability, is an appropriate fit for harms arising from this new technology because a party need not prove negligence to prevail. Strict liability was uniquely developed to handle those activities that are “abnormally dangerous.” An abnormally …

Is Insurance "Just A Contract" Or A "Just Contract"?, Chaim Saiman

Faculty Publications

Courts never tire of saying an insurance policy is “just a contract” and subject to ordinary rules of contract law. Contract here signals a plain language approach that strives for formal neutrality between the parties. Yet courts also frequently rely on a narrative that an insurance policy strives to be a “just contract” with special pro-policyholder rules that reach beyond the plain language.

How is insurance simultaneously “just a contract” and a “just contract?” Prior scholarship has noted the confusion, but this Article aims to reconcile the dueling narratives. When the issue relates to scope or breadth of coverage—whether a …

Formalizing Compliance To Reduce Board Exposure To Civil And Criminal Liability, Cheryl L. Wade

Faculty Publications

(Excerpt)

Fraternities and sororities (Greek-letter organizations or “GLOs” as used herein) are nonprofit organizations that present uniquely complex issues when considering the GLO directors’ ability to oversee and manage the organizations’ potential exposure to criminal and civil liability. Legal analysis of the fiduciary obligations of nonprofit directors borrows from, and analogizes to, the law of directorial fiduciary duty in the for-profit context. There are, however, important structural differences between for-profit and nonprofit firms that require consideration when thinking about how GLO boards operate. The potentiality of criminal and civil liability for a GLO is uniquely driven by the misconduct of …

The Color Of Property And Auto Insurance: Time For Change, Jennifer B. Wriggins

Faculty Publications

Insurance company executives issued statements condemning racism and urging change throughout society and in the insurance industry after the huge Black Lives Matter demonstrations in summer 2020. The time therefore is ripe for examining insurance as it relates to race and racism, including history and current regulation. Two of the most important types of personal insurance are property and automobile. Part I begins with history, focusing on property insurance, auto insurance, race, and racism in urban areas around the mid-twentieth century. Private insurers deemed large areas of cities where African Americans lived to be “blighted” and refused to insure all …

Why Insurance Needs A Restatement: The Case Of Settlement Decision Law, Chaim Saiman

Faculty Publications

Even before its publication, the Restatement of the Law, Liability Insurance had been subjected to withering wholesale criticism that it creates aspirational and pro-policyholder insurance law. This view continues to be forcefully promoted by insurers and their advocates in the legal literature and by governors and state legislatures in the political areas.

This Article finds these wholesale criticisms unwarranted. Liability insurance law is not a field where law is simply found and restated. In fact, settlement law offers the most vivid examples of why the Restatement of the Law, Liability Insurance is possible, useful, and justified. It is possible because …

Reflections On Covid-19, Insurance, Business Interruption, Systemic Risk, And The Future, Robert H. Jerry Ii

Faculty Publications

The COVID-19 pandemic is a major loss event for the insurance industry. This chapter begins with an overview of the pandemic’s most significant insurance implications. Because business interruption has been the most prominently discussed of these impacts, the second part of this chapter takes a closer look at business interruption insurance. This part describes how markets for this coverage are structured in the U.S., and then undertakes a detailed analysis of one of the most common business interruption policy forms, demonstrating that some aspects of this form, insofar as pandemic-caused business interruption is concerned, were not drafted with utmost precision. …

Moving Beyond Medical Debt, Brook E. Gotberg, Michael D. Sousa

Faculty Publications

In recent years it has become clear that medical costs are imposing severe financial burdens on American families, sometimes to the point that bankruptcy becomes the only escape from crippling debt. When evaluating the well-established connection between outstanding medical debt and consumer bankruptcy, most existing empirical studies attempt to quantify the percentage of consumer bankruptcies that are "caused" by unmanageable medical indebtedness. This Article addresses what we believe to be a more significant line of empirical inquiry, namely, the connection between health insurance coverage and consumer bankruptcy as a more precise measurement of how national health insurance programs may or …

"Undue Hardship" And Uninsured Americans: How Access To Healthcare Should Impact Student-Loan Discharge In Bankruptcy, Alexander Gouzoules

Faculty Publications

Student-loan debt has grown to unprecedented heights. Contributing to the severe burden imposed by these debts is the Bankruptcy Code’s unique presumption that they are not dischargeable. To overcome that presumption, a debtor must establish that repayment of her loans would constitute an “undue hardship.” This essay examines the disagreement among bankruptcy courts that have interpreted the “undue hardship” standard in situations where a debtor is unable to afford health insurance—a common occurrence among the economically disadvantaged. After examining recent healthcare reforms, I argue that Congress has expressed a judgment that all Americans should obtain minimum essential healthcare. Though this …

In Deep: Dilemmas Of Federal Flood Insurance Reform, Jennifer Wriggins

Faculty Publications

Floods are the most expensive form of natural disaster in the United States. Recent massive floods in Louisiana show the magnitude of the devastation floods can cause. Climate change and population growth are likely to lead in the coming decades to more severe, frequent, and costly floods. How we pay for flood losses is an urgent public policy issue. The National Flood Insurance Program (NFIP) provides most of the flood insurance policies on homes in the United States. The U.S. Flood Insurance Program is a complex scheme that uses insurance coverage subsidies, mandates, and other tools to support various policies …

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

Faculty Publications

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 industry, …

Mandates, Markets, And Risk: Auto Insurance And The Affordable Care Act, Jennifer Wriggins

Faculty Publications

Now that the Affordable Care Act (ACA) individual health insurance mandate has been upheld by the United States Supreme Court, it is an opportune time to examine precedents for the individual mandate that were not considered in the legislative debate or litigation about the ACA’s constitutionality, particularly auto insurance mandates. Although opponents’ arguments were cast largely as Commerce Clause claims, the arguments have a deeper foundation as claims about liberty and coercion which go far beyond the Commerce Clause. Although auto insurance mandates are obviously different, particularly in that they are state rather than federal, auto insurance mandates can help …

Life, Health, And Disability Insurance: Understanding The Relationships, Robert H. Jerry Ii

Faculty Publications

This project focuses on the extent to which dis-ability insurers should be allowed to use genetic information in underwriting and rate-setting, but this subject cannot be completely isolated from the related questions of whether life and health insurers should also have this discretion. Federal and state laws place significant restrictions on insurers' use of genetic information in health insurance, but regulation of such use in life and disability insurance is considerably more modest. This essay examines the reasons for this disparity and discusses the implications for future proposals to regulate disability insurers' use of genetic information in underwriting and rate-set-ting. …

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

Faculty Publications

Natural disasters and terrorism events of a massive scale are "difficult risks." They are difficult (or, if large enough, impossible) to insure, and they present enormous risk-management challenges. Indeed, we are now in an era when difficult risks are the dominant feature of the risk-management landscape. These kinds of risks are inevitably multi-jurisdictional in nature, and managing them effectively requires a cohesive, comprehensive national catastrophe policy involving ex ante prevention and mitigation measures, effective risk allocation through insurance mechanisms, and ex post victim-compensation strategies. Although our nation is not yet close to establishing a much-needed and increasingly discussed national catastrophe …

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

Faculty Publications

The discussion in this Article is divided into four parts. Part I summarizes the landscape, past and present, with respect to insurer collaboration in underwriting. Part II considers whether, absent an antitrust exemption, multiinsurer agreements and collaborative insurer standard-setting with respect to underwriting violate federal antitrust law. This Part also evaluates whether insurers, to the extent potential federal liability exists, enjoy any kind of statutory or judicial exemption from federal law for such activities. Part III considers the same questions addressed in Part II but in the context of state antitrust laws. Because antitrust law, including the law of antitrust …

Is Civil Authority Business Interruption Coverage A Soft Risk In The Post-9/11 World, Robert H. Jerry Ii

Faculty Publications

Tthe question whether 9/11 has changed the insurance world cannot be answered simply In some respects, nothing is different, but it is difficult to be sanguine about this assessment. Terrorism is less predictable in terms of magnitude and frequency of loss, and this raises doubts about the capacity of the industry with respect to future events. Until the uncertainty with respect to the terrorism risk abates and markets stabilize, problems of cost and availability will persist. This, of course, has been true in other insurance sectors in the past, and temporary dislocations do not necessarily justify government intervention. If, however, …

Insurance, Terrorism, And 9/11, Robert H. Jerry Ii

Faculty Publications

The question of whether 9/11 has changed the insurance world cannot be answered simply. In some respects, nothing is different, but it is difficult to be sanguine about this assessment. Terrorism is less predictable in terms of magnitude and frequency of loss, and this raises doubts about the capacity of the industry with respect to future events. Until the uncertainty with respect to the terrorism risk abates and markets stabilize, problems of cost and availability will persist. This, of course, has been true in other insurance sectors in the past, and temporary dislocations do not necessarily justify government intervention. If, …

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

Faculty Publications

More than a quarter-century has passed since I entered law school as a first-year student and began what has become a career of reading, among other things, cases. I cannot even guess the number of cases I have read in the ensuing years. Most of them have been fairly ordinary, but many have been wonderful for one reason or another. Because I hope to read at least as many cases during my next twenty-five years (or more) of legal study, I am not yet ready to crown any particular case with the title of "my favorite," "the most significant," or …

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

Faculty Publications

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 sorted out.

The Role Of Jury In Modern Malpractice Law, Philip G. Peters Jr.

Faculty Publications

This article explores the policy issues raised by the choice between a custom-based standard of care and a jury-determined reasonability standard. The author examines not only traditional legal arguments but also the recent findings of cognitive psychology, jury performance studies, and health industry research. Not surprisingly, this analysis reveals that both options are imperfect. However, the author cautiously recommends the reasonable physician standard. The revolutionary transformation of the health care industry in last quarter of a century has transferred considerable power from physicians to the health insurance industry, an industry that has not yet earned the privilege of self-regulation. Unlike …

Teaching Torts Without Insurance: A Second-Best Solution, David A. Fischer, Robert H. Jerry Ii

Faculty Publications

Teachers, scholars and practitioners have long appreciated the symbiotic relationship of torts and insurance. Indeed, the assertion that tort law and insurance law are intertwined is utterly unremarkable; many commentators have observed that tort law cannot be understood if the business of insurance and the law regulating it is ignored, and that insurance law cannot be understood if tort law is ignored. Several generations of law students have read casebooks, which in varying degrees pay homage to the connections between torts and insurance. Many law review articles and noteworthy books (or portions thereof) have plumbed the tort-insurance relationship. Although one …

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

Faculty Publications

With nearly seven percent of the world's population currently online and e-commerce forecast to hit $6.8 trillion by 2004, one need not be Nostradamus to predict that the Internet means great change for all industries - including the insurance industry. Presently, however, the proverbial cart is leading the horse as the insurance industry struggles to develop strategies to quantify, cover, and contain "cyber-risks." Policyholders also face new challenges as they confront the possibility that their traditional insurance coverages are woefully inadequate either to secure their electronic and intellectual property assets or to guard against their potential e-commerce liabilities to third …

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

Faculty Publications

This Article examines the theoretical justification for the insurer's asserted right to reimbursement of defense costs incurred in defending noncovered claims. Part I sketches some details about the duty to defend which are necessary prerequisites to exploring any claim to a right of reimbursement. Part II 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. This Part concludes that a reasoned argument can be made in support of the …

Patient Safety, Risk Reduction, And The Law, Larry I. Palmer

Faculty Publications

No abstract provided.

Getting A Handle On Coverage Decisions: If Not Case Law, Then What - Comments On A Paper By Professor William Sage, Maxwell J. Mehlman

Faculty Publications

Comments on Professor William Sage's paper "Judicial Opinons Involving Health Insurance Coverage: Trope L'Oeil or Window on the World."

Insurance, Contract, And The Doctrine Of Reasonable Expectations, Robert H. Jerry Ii

Faculty Publications

This article examines the connections between the doctrine of reasonable expectations and the law of contract. Judge Keeton urged in his 1970 article that protecting the insured's reasonable expectations is a better justification for results in many reported cases than the rationales offered by judges! Without disagreeing with that point, it can be claimed, as this article does, that insurance law's efforts to explain outcomes that contradict the plain language of contractual text are appropriately viewed as a subset of a larger effort to rationalize contract law with the challenges presented by the widespread use of standardized forms in consumer …

Consent, Contract, And The Responsibilities Of Insurance Defense Counsel, Robert H. Jerry Ii

Faculty Publications

This paper examines some of the assumptions on which many contemporary assessments of defense counsel's relationship with the insurer and the policyholder rest, contends that some of the current turmoil in this area is traceable to shaky assumptions, and argues that the drafting of clearer liability insurance contracts would add stability to the relationships. Part I briefly describes the current uncertainty confronting policyholders and defense counsel. Part II explores what the most widely-used liability insurance contracts say about the responsibilities of insurance defense counsel, examining both the context in which these policies are sold and the texts themselves. It contends …

Health Insurance Coverage For High-Cost Health Care: Reflections On The Rainmaker, Robert H. Jerry Ii

Faculty Publications

This article reflects upon the film "The Rainmaker" and analyzes how the health insurance coverage problems that it addresses take us to the vortex of some of the most difficult issues facing our nation's health care system.