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Insurance Law
SUNY Buffalo Law School
Kohane, Dan D.

 
Table of Content
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance Law
 
Unit I: Business of insurance
 
A. Insolvency
 
f warranty is provided by someone in insurance business, government should make sure that the company is solvent (there are assets within that company to pay off the claim) -solvency is a huge issue; whole scheme of insurance is designed to make sure there are money to be paid off when disaster happens.
 
 
B. McCarran-Ferguson Act Definition
·        The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.
·        No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance
è    The term “business of insurance” separates the field of state regulation from the zone of federal regulation; to the extent the states regulate the business of insurance, the federal government is preempted from instituting its own scheme of regulation-unless Congress choose to reenter the field by enacting a statute “specifically relating” to the business of insurance.
 
è    No premium can be set/increased/decreased without approval of state insurance department to make sure that the company is not exposed to impermissible rate; insurance company is rigidly regulated in terms of rate.
 
 
McCarran-Ferguson Act-1945
SC (in Southeastern Underwriter’s) decides that ins is commerce and therefore can be regulated by the fed gov’t; in response Cong immediately enacted the MFA to make it clear that Cong’ intent is that regulation of ins was left to the state.
Silence on the part of Cong should not present any barrier to regulation by the state.
Therefore, IC activity is not covered by federal regulation unless:
The ins activity doesn’t involve the business of ICs.
The federal regulation specifically relates to the business of ins.
There’s an area that the state has not regulated (ex. preemption).
MFA: state regulates the activity of the IC if:
Matter to be regulated involves the “business of ins”
State has legislated and regulated the activity.
Federal statute does not specifically regulate the business of ins.
If the state can regulate it, that co is subject to the breadth of the regulatory scheme – if they can’t, the cos are allowed to do just about anything minus fraud
 
 
State insurance department plays a central role in regulating insurance companies in every aspect including regulating rates, making sure they’re remained solvent, in times of liquidation of insurance companies.
 
Insurance Law section 1101: Interest in Asset
The insured is expected to have interest in asset (e.g. you need to have interest in the building in order to have insurance on the building (if you have no interest, you can burn it down)
 
o              Life insurance: need to have interested in the person you’re insuring when you buy the policy even if interest goes down by time passes. (e.g. When there’s divorce, one could say you no longer have interest in that person but you still have insurance because you HAD insurance when you bought it)
 
Insurance Law Section 1102: License to sell insurance
Companies can’t sell insurance unless it’s licensed and they can’t sell insurance out of state unless it’s licensed.
Insurance department is very careful in licensing companies.
 
 
Reinsurance
o        Insurance companies are al

with the insurance company to be indemnified
 
Discussion: The court said insurance company had to pay because the event was fortuitous; the property owner had no expertise in roof repair
·   Court found that the property owner had no control over expected result; loss was not within direct control of property owner. From property owner’s perspective, it was fortuitous.
The fact that it was predictable doesn’t make it not-fortuitous.
 
Unit II: Interpreting Insurance
 
Double indemnity
Double indemnity is a clause or provision in a life insurance or accident policy whereby the company agrees to pay the stated multiple of the face amount in the contract in cases of accidental death. An accidental death is a death that is neither intentionally caused by a human being, such as homicide, nor foreseeable, such as cancer.
In 2004, 4.67% of all deaths in the United States were declared accidental.[1] For this reason, double-indemnity clauses are usually relatively cheap and often aggressively marketed, especially to people over 45. Children and people in dangerous jobs, such as heavy construction, are the exception.
 
Types of insurance interpretation
 
Occurrence form: A policy obligating the insurer to pay or defend claims whenever made, resulting from an accident or injurious exposure to conditions that occurred during the specific time period the policy was in effect. –Covers all claims and it does not matter if claim was made after policy expired.