Insurance Law Between Business Law and Consumer Law

Abstract

This report responds to the questionnaire for the Eighteenth Inter national Congress on Comparative Law on Commercial Law? Insurance law between business law and consumer law. Although the U.S. insurance market is enormous and includes a substantial con sumer component, for the most part U.S. insurance law does separately protect insurance consumers. U.S. insurance law is neither a branch of private contract law nor of public commercial law, but is its own field that includes aspects of both public and private law. From a procedural standpoint, no significant distinction is drawn be tween insurance and other civil litigation, except that insurance companies make more use of the declaratory relief mechanism than other litigants. State insurance regulators provide some administra tive protection for consumers, but it is difficult to determine its effectiveness. The Federal government's role in insurance law is lim ited by the McCarran-Ferguson Act. As a result, each of the fifty states has a comprehensive and robust system of insurance regulation through statutes, administrative regulations, and common law rules. Some common law rules provide greater protection to consumers, such the reasonable expectations doctrine and the sophisticated insured exception to the ambiguity rule, but neither of these examples has much significance under current U.S. insurance law. State regulatory regimes protect both commercial insureds and consumers through market conduct regulation, approval of policy forms, and price regula tion. This regulation is supplemented by common law rules such as the rule imposing tort liability for insurer bad faith conduct and the interpretive rule that ambiguous provisions are construed in favor of insurance coverage.