Kenneth Feinberg

Jillian Redding, Esq

Abstract

This article explores the current state of ERISA law and its effects on good faith, fiduciary breaches, and available remedies. Although recent case law provides that the duty of good faith applies in an ERISA context, breaches typically result in recovery for the employee benefit plan rather than the injured participant. Courts have further held that ERISA precludes state remedies, even those specific to insurance. Part one offers an overview of ERISA and explains why state remedies or greater state oversight are necessary to protect beneficiaries. Section two discusses ERISA’s legislative background. Section three examines several cases that illustrate ERISA’s failure to provide adequate remedies for fiduciary breaches. Section four presents a case study of Unum Provident, a disability insurer whose egregious misconduct led to long-term, strict oversight by state departments of insurance. The final section reviews various scholarly theories on improving ERISA remedies and advances the author’s argument that the most effective and efficient solution is to require strict state regulatory oversight, a remedy demonstrated to be successful in the Unum Provident case.

Angelo Borselli

Abstract

This article examines rate regulation in the U.S. property and casualty insurance market, arguing that rate deregulation is a superior alternative to current regulatory models. Although rate regulation aims to promote insurer solvency and prevent oligopolistic pricing, it can also lead to market inefficiencies. Historically, the nineteenth-century property and casualty market was highly competitive—marked by periods of low losses and high profits that attracted new entrants—and inadequate rate setting led to thousands of insurer insolvencies. Insurers attempted to solve this problem through compacts, agreements allowing a manager to set rates, but these often failed due to cheating and the inability to mandate universal participation; by the late nineteenth century, anti-compact statutes prohibited the practice. In the early twentieth century, states began enacting fire insurance rate regulation laws, which became widespread by the 1940s, while casualty insurance remained less regulated. After the McCarran-Ferguson Act of 1945 confirmed state primacy in insurance regulation, model laws developed by the AIC and NAIC influenced state legislation. Over time, states moved away from cooperative rate bureaus toward independent rate filing, increasing competition. Today, most property lines are governed by less restrictive systems such as “file and use,” “use and file,” “flex rating,” “modified prior approval,” or even no-file regimes. Proponents of regulation cite consumer protection, insurer solvency, prevention of unfair pricing, and actuarial accuracy; opponents counter that destructive competition is no longer a threat, that competitive markets are the proper mechanism for price setting, that deregulation enhances competition, and that it reduces the politicization of rate setting. The article argues that the structure of the American property and casualty market—featuring numerous firms offering nearly identical products, low entry barriers, and non-concentrated market metrics under the Herfindahl-Hirschman Index and DOJ Merger Guidelines—demonstrates that the industry lacks monopolistic or oligopolistic characteristics requiring rate regulation. The European Union experience following the 1992 Third Non-Life Insurance Directive, which barred member states from regulating insurance prices, provides a useful comparison: competition increased, premiums decreased, and insolvencies declined as prices aligned with costs, though market concentration sometimes rose due to mergers and acquisitions. The article notes that U.S. rate regulation may hinder insurer profitability, suppress rate adjustments in changing market conditions, and contribute to insurer exits, as evidenced by the net decline in market participants in several lines from 2000 to 2009. Deregulation would reduce compliance costs, facilitate responsive rate changes, and potentially improve market availability and consumer choice, even if rates rise in the short term. Because rate regulation has not eliminated insurer insolvency risks—and aligning rates with costs would likely enhance financial strength—the article concludes by urging policymakers to seriously consider broader insurance rate deregulation.

Mark M. Bell

Abstract

This article clearly and plainly describes the genesis and history of the doctrine of “concurrent causation” and the development of anti-concurrent causation policy exclusions in first-party property insurance coverage cases. After outlining this unique history, the article argues that it is time to create a new lexicon for addressing concurrent causation issues and advocates for a deliberate, categorical approach to resolving questions arising from concurrent causation.

Charlene Luke & Aviva Abramovsky

Abstract

The National Flood Insurance Program (NFIP) has fallen short in fulfilling its promise as a social safety net for flood loss victims. In place of the NFIP, this Article proposes a mandatory social insurance plan that would harness the strengths of the federal taxing authority to provide basic relief for flood losses occurring at an individual’s primary residence. Any plan addressing flood loss must navigate deeply contested views about government intervention, redistribution, private markets, environmental protection, and property rights. This Article argues that government intervention in flood loss relief is inevitable, at least for the foreseeable future, and that such intervention should focus on the ex ante provision of a social safety net. The proposed program is also designed to provide additional tools for addressing the complexities of flood loss, including reducing negative environmental externalities, and to offer the impetus needed to harmonize existing tax provisions and grant programs.

Caitlin P. Holt

Bethany L. DiMarzio

Michael A Barrese

Francisco Marcos

Abstract

Inherent Defects Insurance (“IDI”) for new housing buildings has been mandatory in Spain since 2000, prompting significant growth in the IDI market in the years that followed. Facing increased competition, major insurance carriers active in the property insurance market formed a cartel that also involved IDI reinsurers. This article examines the features of the Spanish IDI cartel as uncovered by the National Competition Commission (“NCC”) in 2009. The companies involved were fined over €120 million—the largest fine ever imposed by Spanish competition authorities. The article describes how the cartel was organized and operated, emphasizing the reinsurers’ key role in ensuring and propagating the effectiveness of the minimum price agreement across the property insurance market. It also critically analyzes the NCC’s assessment of the cartel and evaluates how the Commission addressed the reinsurers’ arguments in defense of their conduct.

Steven Plitt