Monday, November 1, 2010
Short comment on torts and the insurance industry
Jay Feinman, Distinguished Professor of Law, Rutgers-Camden, has posted a very good short comment on the TortsProf Blog titled "Tort Law and the New Economics of Insurance." Here are the first two paragraphs: There is widespread acceptance of the idea that tort law and insurance are intimately related. The growth of liability insurance permitted the expansion of tort liability through the twentieth century, and the expansion of tort law in turn spurred the further development of liability insurance. The compensation objective of tort would not be served without the presence of insurance. First-party insurance obviates the need for tort in some circumstances and, through the collateral source rule, effectively funds contingent fees in other circumstances. And so on. All of these ideas are based on the assumption that insurance works—that companies assess risks, insureds purchase policies against those risks, and the companies pay claims that are within coverage. Unfortunately, the facts about insurance are increasingly at odds with this assumption. Most companies pay out most claims most of the time, of course. But more and more, insurance companies deny valid claims in whole or part and force policyholders and tort victims to litigation to obtain the benefits to which they are entitled. Go here to continue reading the full comment.