Four conceptions of insurance

University of Pennsylvania Law Review

Volumn 161, Issue 3, 2013, Pages 653-698

  Abraham, Kenneth S ^a  

^a UNIVERSITY OF VIRGINIA   (United States)

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[No Author keywords available]

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EID: 84874029205     PISSN: 00419907     EISSN: 19428537     Source Type: Journal    
DOI: None     Document Type: Review

References (90)

1. See John R. Searle, How to Derive "Ought" from "Is", 73 PHIL. REV. 43, 56-58 (1964) (arguing that descriptive statements of fact can give rise to normative statements).
2. See Emerson H. Tiller & Frank B. Cross, What is Legal Doctrine?, 100 NW. U. L. REV. 517, 519 (2006)
3. See e.g., Friedrich Kessler, Contracts of Adhesion-Some Thoughts About Freedom of Contract, 43 COLUM. L. REV. 629, 632-33 (1943) (describing the conflict courts face when enforcing harsh terms in standardized contracts between parties with unequal bargaining power).
4. See KENNETH S. ABRAHAM, INSURANCE LAW AND REGULATION 31 (5th ed. 2010).
5. See, e.g., John C. P. Goldberg, Twentieth-Century Tort Theory, 91 GEO. L. J. 513, 524-25 (2003) (criticizing certain theorists' view of tort law as a de facto administrative agency designed to "regulate behavior on a forward-looking basis");
6. David Rosenberg, The Causal Connection in Mass Exposure Cases: A "Public Law" Vision of the Tort System, 97 HARV. L. REV. 849, 905-08 (1984) (arguing that costs for mass exposure litigation should be decreased to enable the tort system to act as a "public law mechanism[]").
7. See KENNETH S. ABRAHAM, THE LIABILITY CENTURY: INSURANCE AND TORT LAW FROM THE PROGRESSIVE ERA TO 9/11, at 193-97 (2008)
8. See TOM BAKER & SEAN GRIFFITH, ENSURING CORPORATE MISCONDUCT 44-51 (2010) (examining the role of directors' and officers' liability insurance in corporate liability).
9. See, e.g., Smith v. Am. Family Life Assurance Co. of Columbus, 584 F.3d 212, 215 (5th Cir. 2009)
10. TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co., 114 F.3d 731, 732 (8th Cir. 1997)
11. See, e.g., Roger C. Henderson, Insurance Protection for Products Liability and Completed Operations-What Every Lawyer Should Know, 50 NEB. L. REV. 415, 441 (1971) (stating that products liability insurance exclusions preclude coverage for damage to the insured's own product because they cover tort liability for physical damage to others, not contractual liability for economic loss);
12. Michael B. Rappaport, The Ambiguity Rule and Insurance Law: Why Insurance Contracts Should Not Be Construed Against the Drafter, 30 GA. L. REV. 171, 194 (1995)
13. Alan O. Sykes, "Bad Faith" Refusal to Settle by Liability Insurers: Some Implications of the Judgment-Proof Problem, 23 J. LEGAL STUD. 77, 84 (1994)
14. See, e.g., Kenneth S. Abraham, Environmental Liability and the Limits of Insurance, 88 COLUM. L. REV. 942, 946 (1988) (suggesting that adverse selection and moral hazard create asymmetrical uncertainty, where the insured has more information than the insurer, and that this impedes insurance from working efficiently).
15. See, e.g., Tom Baker, On the Genealogy of Moral Hazard, 75 TEX. L. REV. 237, 276-77 (1996)
16. Peter Siegelman, Adverse Selection in Insurance Markets: An Exaggerated Threat, 113 YALE L. J. 1223, 1240 (2004)
17. See, e.g., Wayne R. Barnes, Toward a Fairer Model of Consumer Assent to Standard Form Contracts: In Defense of Restatement Subsection 211(3), 82 WASH. L. REV. 227, 242 (2007)
18. See ROBERT E. KEETON & ALAN I. WIDISS, INSURANCE LAW § 6. 3 (a) (4) (1988)
19. But see Daniel Schwarcz, Reevaluating Standard Insurance Policies, 78 U. CHI. L. REV. 1263, 1277-1308 (2011)
20. See Randy E. Barnett, Consenting to Form Contracts, 71 FORDHAM L. REV. 627, 634-35 (2002) (contending that under the consent theory of contract, the assent that is "critical" is not the promise to do something, "but the manifested assent to be legally bound to do so").
21. See, e.g., Middlesex Ins. Co. v. Mara, 699 F. Supp. 2d 439, 446 (D. Conn. 2010)
22. Nautilus Ins. Co. v. Nicky & Claire's Day Care, Inc., 630 F. Supp. 2d 727, 734 (W. D. Tex. 2009)
23. (quoting Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S. W.2d 517, 520 (Tex. 1995)));
24. NorFab Corp. v. Travelers Indem. Co., 555 F. Supp. 2d 505, 509 (E. D. Pa. 2008)
25. (quoting 401 Fourth St., Inc. v. Investors Ins. Grp., 879 A.2d 166, 171 (Pa. 2005)));
26. John S. Clark Co. v. United Nat'l Ins. Co., 304 F. Supp. 2d 758, 764 (M. D. N. C. 2004)
27. See Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 HARV. L. REV. 1173, 1185 (1983)
28. See RESTATEMENT (SECOND) OF CONTRACTS § 212 cmt. a (1981)
29. Michelle E. Boardman, Contra Proferentem: The Allure of Ambiguous Boilerplate, 104 MICH. L. REV. 1105, 1110 (2006) (arguing that courts subordinate the meaning an individual party may attach to contract language to the goals of "fairness and future clarity, and, in the insurance context, the 'reasonable expectations' of the policyholder").
30. See Kenneth S. Abraham, Making Sense of the Liability Insurance Crisis, 48 OHIO ST. L. J. 399, 400-01 (1987) (discussing the causes of the underwriting cycle and how it could explain industry-wide changes in premium rates in past decades);
31. Kyle D. Logue, Toward A Tax-Based Explanation of the Liability Insurance Crisis, 82 VA. L. REV. 895, 907-12 (1996)
32. See, e.g., Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L. J. 87, 106-07 (1989) (arguing that courts should use penalty defaults, rather than the defaults parties would have wanted, where penalty defaults encourage information sharing and clearer contracts);
33. Ian Ayres & Robert Gertner, Strategic Contractual Inefficiency and the Optimal Choice of Legal Rules, 101 YALE L. J. 729, 765-66 (1992) (advocating an "efficient contract rule" as a default rule to combat strategic behavior by parties to incomplete contracts);
34. Charles J. Goetz & Robert E. Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms, 73 CALIF. L. REV. 261, 320 (1985)
35. Robert E. Scott, A Relational Theory of Default Rules for Commercial Contracts, 19 J. LEGAL STUD. 597, 615 (1990) (suggesting that a rigid interpretation of default rules would discourage compliance with informal social rules that promote cooperation);
36. Symposium on Default Rules and Contractual Consent, 3 S. CAL. INTERDISC. L. J. 1 (1993)
37. see also Richard Craswell, Contract Law, Default Rules, and the Philosophy of Promising, 88 MICH. L. REV. 489, 504 (1989)
38. See, e.g., A. Y. McDonald Indus., 475 N. W.2d at 618-19
39. See, e.g., McNeilab, Inc. v. N. River Ins. Co., 645 F. Supp. 525, 547 (D. N. J. 1986)
40. See RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW § 12. 1 (7th ed. 2007).
41. Robert Pear, Senate Democrats Lay Out a Plan to Regulate Health Insurance Premiums, N. Y. TIMES, Apr. 21, 2010, at A15;
42. see also Spencer L. Kimball, The Purpose of Insurance Regulation: A Preliminary Inquiry in the Theory of Insurance Law, 45 MINN. L. REV. 471, 523 (1961)
43. See The McCarran-Ferguson Act: Implications of Repealing the Insurers' Antitrust Exemption: Hearing on S. 557 Before the S. Comm. on the Judiciary, 109th Cong. 79 (2006)
44. Oversight Hearing on Insurance Brokerage Practices, Including Potential Conflicts of Interest and the Adequacy of the Current Regulatory Framework: Hearing on S. 736 Before the Subcomm. on Fin. Mgmt., the Budget, and Int'l Sec. of the S. Comm. on Governmental Affairs, 108th Cong. 66, 71 (2004) (testimony of Eliot Spitzer, N. Y. Att'y Gen.)
45. Jay Angoff, Insurance Against Competition: How the McCarran-Ferguson Act Raises Prices and Profits in the Property-Casualty Insurance Industry, 5 YALE J. ON REG. 397, 404 (1988)
46. See The McCarran-Ferguson Act, 15 U. S. C. §§ 1011-1015 (2006)
47. See Susan Randall, Freedom of Contract in Insurance, 14 CONN. INS. L. J. 107, 146-47 (2008)
48. See Why is Regulation of Insurance Necessary?: Before the Task Force on Long-Term Solutions For Florida's Hurricane Insurance Market 5 (2005) (statement of J. Robert Hunter, Dir. of Ins., Consumer Fed'n of Am.), available at http://www.myfloridacfo.com/hurricaneinsurancetaskforce/TaskforceRS2/Appendix5/ 9aFloridaStatementWhyisRegulationofInsuranceNecessary.pdf
49. see also Shavers v. Kelley, 267 N. W.2d 72, 87 (Mich. 1978)
50. Matthew O. Tobriner & Joseph R. Grodin, The Individual and the Public Service Enterprise in the New Industrial State, 55 CALIF. L. REV. 1247, 1249, 1273 (1967)
51. 15 U. S. C. §§ 1011-1015.
52. See, e.g., North Carolina ex rel. Comm'r of Ins. v. N. C. Fire Ins. Rating Bureau, 234 S. E.2d 720, 3t725, 730 (N. C. 1977)
53. (codified at 29 U. S. C. § 1181
54. and 42 U. S. C. § 300gg).
55. See HENRY J. KAISER FAMILY FOUND., HEALTH INSURANCE MARKET REFORMS: PRE-EXISTING CONDITION EXCLUSIONS 3-4(2012), available at http://www.kff.org/ healthreform/upload/8356.pdf
56. See generally Ronen Avraham, Kyle D. Logue & Daniel Schwarcz, The Anatomy of Insurance Anti-Discrimination Laws 20-21 (Univ. of Mich. Law Sch. Pub. Law & Legal Theory Research Paper Series, Paper No. 289, 2012), available at http://ssrn. com/abstract=2135800
57. See Robert W. Klein, The Insurance Industry and Its Regulation, in THE FUTURE OF INSURANCE REGULATION IN THE UNITED STATES 13, 18 tbl.2-2 (Martin F. Grace & Robert W. Klein eds., 2009)
58. Parker v. Brown, 317 U. S. 341, 350-51 (1943)
59. Ass'n v. United States, 268 U. S. 563, 586 (1925)
60. See, e.g., Hartford Cas. Ins. Co. v. Powell, 19 F. Supp. 2d 678, 693-94 (N. D. Tex. 1998)
61. W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 HARV. L. REV. 529, 540-44 (1971)
62. See Daniel Schwarcz, A Products Liability Theory for the Judicial Regulation of Insurance Policies, 48 WM. & MARY L. REV. 1389, 1405-06 (2007)
63. Jeffrey W. Stempel, The Insurance Policy as Thing, 44 TORT TRIAL & INS. PRAC. L. J. 813, 818 (2009)
64. see also Eugene R. Anderson & James J. Fournier, Why Courts Enforce Insurance Policyholders' Objectively Reasonable Expectations of Insurance Coverage, 5 CONN. INS. L. J. 335, 419-23 (1998) (arguing that insurance policies are defective products in light of the discrepancy between insurer advertising and the scope of coverage actually provided);
65. Another piece by Jeffrey W. Stempel, The Insurance Policy as Social Instrument and Social Institution, 51 WM. & MARY L. REV. 1489, 1495 (2010)
66. Stempel, The Insurance Policy as Thing, supra note 78, at 847-53
67. See Stempel, The Insurance Policy as Thing, supra note 78, at 847-48.
68. 366 N. W.2d 271 (Minn. 1985) (en banc).
69. Stempel, The Insurance Policy as Thing, supra note 78, 3p at 848-49.
70. Kenneth S. Abraham, Theory of Insurance Policy Interpretation,. L. REV 1, 0-44 1996).
71. Probably the seminal work in this field is RICHARD V. ERICSON et al., INSURANCE AS GOVERNANCE (2003)
72. See François Ewald, The Return of Descartes's Malicious Demon: An Outline of a Philosophy of Precaution (Stephen Utz trans.), in EMBRACING RISK: THE CHANGING CULTURE OF INSURANCE AND RESPONSIBILITY 273, 277 (Tom Baker & Jonathan Simon eds., 2002)
73. Deborah Stone, Beyond Moral Hazard: Insurance as Moral Opportunity, in EMBRACING RISK, supra, at 52, 54
74. See, e.g., 155 CONG. REC. S7941 (daily ed. July 22, 2009)
75. See Stempel, The Insurance Policy as Social Instrument, supra note 78, at 1495
76. See Tom Baker & Jonathan Simon, Embracing Risk, in EMBRACING RISK, supra note 114, at 1, 13
77. Carol A. Heimer, Insuring More, Ensuring Less: The Costs and Benefits of Private Regulation Through Insurance, in EMBRACING RISK, supra note 114, at 116, 125-28
78. Stempel, The Insurance Policy as Social Instrument, supra note 78, at 1498-1501
79. For a further discussion of experience rating's effect on the incentives of policyholders, see KENNETH S. ABRAHAM, DISTRIBUTING RISK: INSURANCE, LEGAL THEORY, AND PUBLIC POLICY 72-74 (1986).
80. Jason Scott Johnston, The Return of Bargain: An Economic Theory of How Standard-Form Contracts Enable Cooperative Negotiation between Businesses and Consumers, 104 MICH. L. REV. 857, 879 (2006).
81. see also Lucian A. Bebchuk & Richard A. Posner, One-Sided Contracts in Competitive Consumer Markets, 104 MICH. L. REV. 827, 834 (2006)
82. See, e.g., Rush Prudential HMO, Inc. v. Moran, 536 U. S. 355, 361 (2002) (analyzing an Illinois law that requires independent medical review of denied claims that are appealed).
83. See UNFAIR CLAIMS SETTLEMENT PRACTICES ACT, at ST-900-1
84. See, e.g., Heller v. Equitable Life Assurance Soc'y, 833 F.2d 1253, 1257 (7th Cir. 1987).
85. HAW. REV. STAT. § 431:10C-207 (2005).
86. E.g., Your Choice Auto Insurance Options, ALLSTATE, http://www.allstate. com/auto-insurance/auto-insurance-features.aspx (last visited Jan. 11, 2013) (safe-driving bonus).
87. Cf. Regina Austin, The Insurance Classification Controversy, 131 U. PA. L. REV. 517, 518 (1983)
88. HENRY HANSMANN, THE OWNERSHIP OF ENTERPRISE 288 (1996).
89. Cf. Jennifer B. Wriggins, Automobile Injuries as Injuries with Remedies: Driving, Insurance, Torts, and Changing the "Choice Architecture" of Auto Insurance Pricing, 44 LOY. L. A. L. REV. 69, 82-84 (2010)
90. see Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089, 1089-90 n. 2 (1972).