Insurance Outline Finkel

INSURANCE LAW

|CHAPTER 1. LEGISLATIVE REGULATION OF INSURANCE |
|Insurance industry is HUGE and has very low regulation. Why should it be regulated? People have little ability to negotiate terms ( adhesion K – thus, the regulation comes as a matter of public policy. Ambiguity resolved in |
|favor of the insured. Consumer protection. |
|Also, insurance has important social policy considerations. |
|Important to regulate in order to control rates – make it affordable. Make sure that there is enough $$ in a premium to create reserves in order to pay off claims. Also, insurance companies are for-profit companies – must have |
|enough $$ to give a fair return to investors – pay stock holders or policy holders, depending on what type of insurance company it is. Also, must have enough $$ to protect against insolvency – insurance companies cannot go into |
|bankruptcy – the regulatory scheme guards against bankruptcy. |
|Insurance companies almost have a monopoly – only licensed carriers can sell insurance. |
|Prevent against unfair practices – various states enacted UTPA’s – highly punitive (treble damages, attorney’s fees)