James R. Brakebill

Abstract

Developed democracies in the West are facing a surge of political risk. Democratic institutions are showing their weaknesses as polarization, populism, and trade conflicts sweep across the developed world. Firms and investors with multinational interests have been turning to political risk insurance to mitigate potential losses due to adverse government action. Once limited to emerging markets to insure against risks such as civil war or expropriation, political risk insurance is increasingly being purchased to protect assets from emerging risks in developed economies. While private insurers have been able to respond to the increase in demand for coverage, they are not as well-equipped as their public counterparts. Private insurers lack the information back-channels that only government intelligence networks can provide and do not have the political clout to advocate on behalf of their insureds. Public providers of political risk insurance are typically prohibited from offering coverage for investments outside developing markets and are thus unable to respond appropriately to the new political risks emerging in Western democracies. This Note argues that these restrictions should be relaxed in light of the new threats facing multinational firms and investors that need the backing and support of their home governments.

Robert K. Yass

Erik S. Knutsen & Jeffrey W. Stempel

Lorelie S. Masters & Geoffrey B. Fehling

Jay M. Feinman

James Davey

Abstract

Insurance fraud is not one thing but many. For political reasons, this simple truth is often hidden, as cumulative figures describing the sum total of insurance fraud are deployed to bring about legal and administrative measures that favour the insurance industry. Rule design must recognise those apparently conflicting truths that insurance fraud is socially harmful and that the insurance industry’s approach to counter-fraud is often selfserving. This paper draws on recent developments in the United Kingdom to show how incremental advances in the fight against fraud can be delivered without creating excessive opportunities for the insurance industry to limit the recovery of honest claims

Christopher C. French

Abstract

The financial consequences of the government-ordered shutdowns of businesses across America to mitigate the COVID-19 health crisis are enormous. Estimates indicate that small businesses have lost $255 to $431 billion per month and more than 44 million workers have been laid off. When businesses have requested reimbursement of their business interruption losses from their insurers under business interruption policies, their insurers have denied the claims. The insurance industry also has announced that business interruption policies do not cover pandemic losses, so they intend to fight COVID-19 claims “tooth and nail.” More than 450 lawsuits throughout the country already have been brought against insurers, including dozens of class actions. Legislators in several states have proposed legislation that would require insurers to pay business interruption claims regardless of whether the claims are covered by the wording of the policies. In the absence of a government bailout, the losers of this epic insurance battle-either insurers or their insureds’ businesses-will likely face bankruptcy. Thus, the financial consequences of this battle, and its implications for America’s economy, cannot be overstated. This is the first scholarly Essay to discuss the arguments for and against business interruption policies covering COVID-19 business interruption losses. In doing so, it sets forth the strongest arguments on each side of the fight regarding the meaning of the applicable policy language in the context of the existing caselaw and the purpose of business interruption insurance. It also addresses the insurance industry’s claim that pandemic losses are not covered by business interruption policies because such losses are simply uninsurable. Finally, it discusses the competing public policies that support each side.

Mallory Stone

Jay P. Kesan & Linfeng Zhang

Abstract

Numerous cyber incidents have shown that there are substantial legal risks associated with these events. However, empirical analysis of the legal aspects of cyber risk is largely missing in the existing literature. Based on a dataset of historical cyber incidents and cyber-related litigation cases, we provide one of the earliest quantitative studies on the likelihood of cyber incidents being litigated and the cost of settling a cyber-related case. Using regression models, we showed that some company and incident characteristics play an important role in determining the litigation probability and settlement costs for which our models propose a useful explanation. Our findings show that the lack of Article III standing is commonplace in cyber-related cases, and that solely relying on the common law system makes it difficult for victims of malicious data breaches to sue and receive legal remedies. In addition, we demonstrate that our findings have valuable implications for enterprise risk management in terms of how the legal risk associated with different types of cyber risk should be properly addressed.

Ken Goldstein

Abstract

Blockchain technology is experiencing breakout growth globally. Companies from diverse industry sectors, including insurance, are tapping into its decentralized distributed ledger capability in order to efficiently and transparently transact business, track anything of value, and operate in a more secure environment. While blockchain is being creatively implemented, however, there are also important legal (including legislative) and cybersecurity considerations to account for as a part of the decision-making process. This paper will start by providing an overview of blockchain technology, including the ability to use it as a decentralized distributed ledger. It will then pivot to a variety of blockchain applications either disrupting or supporting the insurance industry. Thereafter, it will explore blockchain-related legal issues along with Connecticut-based legislative developments in the insurance capital of the world. Lastly, the paper will reflect upon cybersecurity strengths, weaknesses, and best practices associated with blockchain.