INSURANCE LAW BETWEEN BUSINESS LAW AND

CONSUMER LAW
ARTICLE REVIEW

Submitted by:

R HARSHAD 17040142060

Submitted To:

PROF. GYANASHREE DUTTA

ALLIANCE SCHOOL OF LAW,

ALLIANCE UNIVERSITY

Date of Submission: 29.03.2021

 CITATION: The American Journal of Comparative Law, 2010, vol. 58, supplement:

Welcoming the World: U.S. National Reports to the XVIIIth International Congress of

Comparative Law (2010), pp. 353-367

Published by: Oxford University Press.

The author Jeffrey E. Thomas has done a detailed research and report on insurance law
between business law and consumer law. The article gives the insight of how the U.S. legal
system has multiple and complex regulatory regimes for insurance which combine statutes,
administrative regulations and common law rules. Regulation of insurance is predominantly
done by the fifty states, and this increases the system’s complexity. The regulatory regimes
generally divide the industry, the subject of regulation, from the consumers, which are to be
protected, without regard for the status or sophistication of the insurance consumer. This
article focuses on the role of insurance law and regulation within the legal system, and in
particular the divide between business or commercial insurance and that provided for
consumers, more commonly known as personal lines. The article is divided into six major
sections: 1) economic aspects of insurance, 2) academic perceptions of the field, 3)
procedural aspects, 4) legislation, 5) the distinction between consumer and commercial risks
and 6) substantive aspects of consumer protection in insurance law.

Firstly the author statistically talks about how America is the major contributor in the world
market of insurance and how America’s market size has dominated the American region.
America’s net premium insurance is divides into life and health insurances which is 59% and
property/casualties insurance account for only 41%. Growth of Annuities was the most
significant trend in the market, were life and health held more than half of the premiums in
2008 were for annuities. As it shows that life and health insurance accounts more than half of
the overall U.S insurance market. Later the author explains though the insurance law is
important in U.S, it is not surprising to see insurance law as an independent elective subject
in the U.S law school. Since U.S curriculum never drew any clear distinction between private
and public law, or between contract and commercial law. Which making insurance regulation
a more specialized area with very less practitioners, as the academy does not divide itself by
public and private law, professorship and chair do not divide that way either.

Secondly the author talks about the procedural aspects of litigation, it’s understandable if the
insurance claims are been taken in both the federal and state courts were the claims from
consumer or businesses are not treated any differently than other civil claims. Some insurance
can be claimed through class-action mechanism governed by the federal rule of civil
procedure, as it wasn’t designed specifically for consumers. There are 2 generally available
devices used for insurance litigation claims, one is declaratory relief and the other is
interpleader. Each state holds insurance commissioner to supervise the insurer for the
protection of insured, each year receiving thousands of complaints mostly from consumer as
the cost of complaint is less and can be done via email, internet submissions and letters.

Furthermore, the administrative review of insurance is authorised by legislation in the

individual states, since the U.S federal hold 50 states they should be careful not to over-
generalise. Even after adopting NAIC (national associations of insurance commissioners)
model, it had been partly successful and had drawbacks for not having any regulations for
protecting consumer as they never treated them different or had any separate laws for
different types of consumers.

Thirdly and finally the author has included two common law doctrines, one dealing with
“sophisticated insured” and “reasonable insured” were in both the distinction between
individual and commercial insured is uncertain. Though consumers receive various
protections since its laws are governed by the state it differs from state to state. Though there
are few regulations falls in common for all the 50 states. Examples regarding the regulations
on various subject matters such as policy forms, price regulations, market conduct, claims
handling regulation, common law remedies for bad faith conduct, and common law rules of
policy interpretation.

The author concluded that The U.S. legal system has multiple and complex regulatory
regimes for insurance which combine statutes, administrative regulations and common law
rules. However the Regulation of insurance is predominantly done by the fifty states and this
increases the system’s complexity. Consumer transactions have taken on the same importance
as commercial ones in the field of insurance. While insurance law had been viewed generally
as a part of commercial or general private law, given the significance of private customer
business, it is developing into a separate discipline.