Kenneth S. Abraham

Abstract

In this article, Kenneth Abraham examines the concept of liability for bad faith practices by insurers. He argues that although liability for bad faith has existed for roughly half a century, it has yet to be fully recognized as part of the formal body of insurance law. Abraham describes what has been, to some extent, a transmogrification in insurers’ bad faith claims-handling practices: what once could be dismissed as an occasional isolated incident or “screw up” can now be characterized as systemic bad faith. He provides four examples, each highlighting a form of systemic bad faith practice undertaken by an insurer. Abraham concludes by discussing the uniqueness of the insurer–consumer relationship and explaining how that relationship creates obligations of fair dealing for insurers that simply do not exist for other private enterprises.

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