|Robert P. Christensen, P.A.||Minneapolis||Minnesota|
|Merkel & Cocke||Clarksdale||Mississippi|
|Coughlin & Gerhart, LLP||Binghamton||New York|
|Mellino Law Firm LLC||Cleveland||Ohio|
|Handley Law Center, The||Oklahoma City||Oklahoma|
|Winder & Counsel, PC||Salt Lake City||Utah|
|Masters Law Firm, L.C., The||Charleston||West Virginia|
|Carroll & O'Dea Lawyers||Sydney||Australia|
|ONC Lawyers||Hong Kong||Hong Kong (SAR)|
The term “insurance” is a contractual agreement, most commonly in the of an insurance policy, which legal binds the insurer to cover the cost of all or any portion of damages suffered by the insured party as defined in the policy. In its essence, the purpose of insurance is to ad-measure the risks of a potential loss from the insured party. The area of insurance law involves the Federal laws and state statutes regulating the business and commercial conduct of the insurance industry.
While types of insurance vary widely, their primary goal is to allocate the risks of a loss from the individual to a great number of people. Each individual pays a “premium” into a pool, from which losses are paid out. The premium is not returnable is a loss is not suffered, in that case the payment is for ‘peace of mind”. Thus, when a loss is suffered, the loss is spread to the people contributing to the pool. To ensure these pools are properly managed and adequately funded, the government and the courts heavily regulate the insurance industry.
In 1944, Congress enacted the McCarran-Ferguson Act (15 USCS § § 1011), which provided that the laws of the several states should control the insurance business, but that the Sherman Act,the Clayton Act, and the Federal Trade Commission Act were applicable to the insurance business to the extent that it was unregulated by state law.
The McCarran-Ferguson Act, broadly speaking, gives states the power to regulate the insurance industry. While state insurance statutes override most federal laws, some portions of federal law (like federal tax laws) are always controlling. To determine whether a particular law governs, the determining factor is whether the issue is related to the “business of insurance”, where state law governs, or whether it is related to peripherals of the industry, such as labor, tax, and securities, where federal law governs.
Compendium of Principles of Law Regarding Bad Faith in the Fifty State and D.C – Complied by the Insurance Coverage and Bad Faith Group of the Primerus Defense Institute