Michelle Boardman

Abstract

Insurance companies rely heavily on actuarial data—facts about past risks—in developing products and navigating regulatory approval. Given the centrality of such data to drafting, pricing, and legitimizing insurance policies, it is striking that courts, insurers, and policyholders largely ignore it when interpreting policies in litigation. This article explores how actuarial data could be used and considers informal explanations for why it is not invoked more often. It identifies three ways actuarial data could improve interpretation and construction. First, actuarial data can help prove or disprove insurer good faith: comparing premiums collected with risks covered can confirm or refute suspicions of bait-and-switch practices. Second, actuarial data can substantiate an insurer’s claimed actuarial purpose, providing contextual clarity that resolves ambiguities—crucial because a finding of ambiguity almost always favors the policyholder. Third, actuarial data can reveal insurer intent, offering insight beyond merely showing the absence of bad faith and generating benefits for both insurers and consumers. The article argues that courts in insurance cases often engage in a task that is both more and less than interpretation—they effectively regulate insurance policies by determining which clauses may be enforced. Actuarial function gives courts intent on regulating the insurance field a clearer view of the policy implications of their rulings, enabling them to consider the interests of policyholders beyond the litigant immediately before them.

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