Wendy K. Mariner

Maggie Flanagan

Abstract

This casenote examines the 2007 case Cogswell v. American Transit Insurance Company, which concerns a conflict between Connecticut insurance claims and a New York insurance company not licensed to do business in Connecticut. Relying on International Shoe precedent, the note discusses the constitutional rights of the New York company and the court’s decision to decline jurisdiction. It uses this Connecticut case to highlight major questions of American civil procedure, including personal jurisdiction, the burdens placed on defendants, the interests of the state and the plaintiff, and the Connecticut Supreme Court’s rulings on each issue. The note also reviews the Court’s citations to similar decisions from other jurisdictions. Finally, it considers the broader policy implications of the Court’s denial of jurisdiction.

Latonia Williams

Abstract

This casenote argues that African-American homeownership is disparately impacted by the discriminatory use of credit scores in homeowners insurance underwriting, asserting a violation of § 3604 of the Fair Housing Act and advocating for Congressional action to ban this practice. It explains that the “American Dream” of homeownership has long been denied to African-Americans through discriminatory Federal Housing Administration (FHA) policies and insurance underwriting practices. Although explicitly racist policies were revised in the 1950s and 1960s, modern underwriting methods—particularly risk classification and credit scoring—have effectively replaced them, producing similarly disenfranchising results. These practices reinforce the historically vulnerable position of African-Americans by limiting their access to homeowners insurance and thereby to homeownership itself, resulting in a disparate, discriminatory impact under the Fair Housing Act. The casenote concludes that Congressional intervention is necessary to eliminate this discriminatory impact and allow African-Americans a fair opportunity to achieve homeownership.

Yelena Tsvaygenbaum

Abstract

This casenote examines the history and potential problems of the 1986 U.S.–Bermuda Tax Treaty, which focuses narrowly on the taxation of insurance premiums. Because Bermuda has no income tax, the treaty gives the island a competitive advantage over the United States. The original reasons for entering into the treaty have since disappeared, and concerns about limited tax transparency and potential tax evasion by non-Bermuda residents present challenges for future U.S.–Bermuda relations. Renegotiating the treaty may be advisable to address these issues and increase taxable income. Although Bermuda’s flexible regulatory environment for insurance and reinsurance is attractive globally—and benefits the United States—American reinsurers face higher taxes than their Bermuda-based counterparts. Domestic concerns about Bermuda’s insurance industry also include tax loopholes involving acquisitions and corporate inversions, potential IRS actions under § 845(b), and overcharging. Various federal bills have been introduced to “level the playing field,” but this casenote suggests that appealing for changes in state reinsurance legislation may be the most effective way to promote domestic economic growth.

Arthur Kimball-Stanley

Abstract

This article focuses on the potential moral hazards created by the use of credit default swaps (“CDS”) and argues that such swaps may warrant regulation analogous to traditional insurance regimes. The author critiques academic mischaracterizations that CDS is fundamentally different from insurance, refuting these arguments by comparing the original rationales for regulating insurance with the moral hazards inherent in credit risk–transfer practices like CDS. Several concrete examples—drawn from investment bank behavior, scholarship on insurance contracts, issues of control, regulatory value, and underlying risk structures—are used to illustrate these parallels. Ultimately, the author contends that, given the significant similarities and comparable risks between CDS and traditional insurance, regulatory approaches for CDS should be seriously explored.

Charles Miller

Abstract

This article discusses the use of claims-handling experts in bad faith insurance claims and the admissibility of their testimony in legal malpractice cases. Although a duty of good faith is well established in insurance jurisprudence, claims-handling experts are often called upon to explain industry training, policies, and the decision-making practices of insurance claims personnel when approving or denying coverage. These experts closely scrutinize the training and preparation of claims handlers, yet courts sometimes limit their testimony out of concern that it may invade the court’s province or hinge on ambiguities in policy language. The article argues that such concerns are invalid and impractical, and that expert testimony of this nature—analogous to expert testimony in legal malpractice cases—is both appropriate and beneficial to the adjudicative process.

Thomas Russell & Jeffrey E. Thomas

Abstract

This article examines the recent market for terrorism insurance, detailing the history and goals of the United States Terrorism Risk Insurance Act (TRIA) in all its iterations. It discusses reinsurance, coverage, reimbursement, and liability within the framework of the Act, as well as the benefits and consequences of government-supported terrorism insurance. The article reviews market reactions to the September 11, 2001 attacks to illustrate the challenges of imperfect capital markets. It also explores the future of Chemical, Nuclear, Biological, and Radiological (CNBR) terrorism and considers its potential impact on insurance programs and markets.

Steven Plitt & Aeryn Heidemann

Abstract

This article examines the effectiveness of state court garnishment actions compared with federal declaratory judgments, focusing particularly on timing issues in insurance coverage disputes. The jurisdiction of Article III federal courts in these cases is shaped largely by the Brilhart and Wilton analyses, which guide courts in determining whether garnishment actions are removable to federal court. The article also discusses federal abstention doctrine as a discretionary mechanism rooted in considerations of comity, equity, and federalism, drawing on precedent from the mid-twentieth century through the present. State court garnishments can impede federal jurisdiction, and the removability of such actions in insurance disputes remains contested, creating significant uncertainty for insurers. As a result, abstention doctrine pushes insurers to file declaratory judgment actions early—regardless of whether a garnishment action would ultimately be removable or non-removable.

William Pitsenberger

Abstract

This article examines state constitutional concerns arising from the 2002 Supreme Court decision Rush Prudential HMO v. Moran, which granted external review entities—not preempted by ERISA—the authority to determine medical services for health organizations. The decision raises significant procedural fairness issues, particularly when viewed in light of state constitutional requirements. External review laws of this kind may be constitutionally infirm, though judicial review and ERISA preemption could mitigate some negative effects. The article explores state external review laws in detail, categorizing them within broader questions of appealability and the binding nature of external review decisions. Many states have “open courts” provisions and embrace separation of powers doctrines, yet the Rush decision complicates these principles. The recent Hawaii Management case adds further uncertainty: allowing judicial review risks ERISA preemption, but disallowing it may violate constitutional separation of powers. Ultimately, resolving this tension may require either accepting the dichotomy created by Rush or adopting mandated benefits systems to avoid the conflict altogether.

Yu Lei & Joan T. Schmit

Abstract

Medical malpractice insurance is a highly specialized and risky business, and over the past three decades the market has experienced three dramatic periods of rising prices and shrinking supply. In response to such volatility, many medical care providers have turned to physician-owned and physician-run entities as their insurers. Regulators and rating agencies, however, have expressed concern about the geographic and business-risk concentration of these entities, encouraging diversification across state lines and lines of business. This article hypothesizes that physician-directed insurers are inherently more conservative and better informed than non-physician-directed insurers, calling into question the value of diversification, which may erode their informational advantage. An analysis of insurer loss-reserving practices supports this hypothesis: physician-directed insurers are more likely to over-reserve and less likely to under-reserve than non-physician-directed insurers, and when they do under-reserve, their errors are smaller. The article also finds that rapidly growing insurers have exhibited risky reserving practices. These results, the authors argue, are important for regulators and rating agencies when assessing the riskiness of medical malpractice insurers.