Insurance Law Center

September 26, 2024, 4 – 5 p.m.
Dr. Rachel Z. Friedman, Tel Aviv University

At the core of the modern welfare state is the institution of social insurance, which provides event-conditioned benefits through a publicly orchestrated system of contributions and distribution. At the core of the modern welfare state is the institution of social insurance, which provides event-conditioned benefits through a publicly orchestrated system of contributions and distribution. Tracing an intellectual history of the practice from the time of the French Revolution through the present, this talk offers an account of how and why social insurance became one of the central policy tools of wealthy democracies. This history reveals that the way in which risk is conceived and calculated has important consequences for the design of social policy. It also shows that the capacity of social insurance to accommodate a plurality of normative principles and aims helps to account for its prominence and political resilience as an institution.

Professor Friedman’s book, Probable Justice: Risk, Insurance, and the Welfare State (Chicago: 2020) is available for those interested in reading further.

October 10, 2024, 4 – 5 p.m.
Heather M. Field, J.D., UC Law, San Francisco

The IRS is outgunned when trying to ensure compliance by large corporations and other sophisticated taxpayers, but the private sector might be able to help. This talk argues for using a private sector party—tax insurers—to expand the IRS’s enforcement abilities. Tax insurance is just insurance: If an insured tax position is successfully challenged by a tax authority, the insurer commits to paying the additional taxes owed (plus interest and penalties), up to the policy limit. This talk proposes that the IRS take advantage of insurers’ informational and capacity advantages by effectively deputizing insurers as private sector tax enforcers, treating the positions they insure as having been “sustained” in a private “audit.” With the right combination of sticks and carrots, private sector tax enforcers could be incentivized to live up to their commitment to “sustain” only strong positions, and taxpayers could be incentivized to pursue “audits” by private sector tax enforcers that live up to those commitments. The talk also identifies the potential concerns the proposal would need to overcome to harness a growing private sector industry for the public good.

Recommended Reading: Heather M. Field, Tax Enforcement by the Private Sector: Deputizing Tax Insurers, 99 Ind. L.J. 1179 (2024).

October 24, 2024, 4 – 5 p.m.
David A. Hoffman, Penn Carey Law School
Rick Swedloff, Rutgers Law School

Contract boilerplate degrading consumers’ litigation options–terms mandating arbitration, exculpating liability, requiring individualized litigation and shifting risk–has proliferated in the last generation. We investigate how insurers influence boilerplate’s adoption and content. Interviewing participants in the liability insurance industry, we show that insurers refine boilerplate language, teach policyholders about its efficacy, and decline coverage when it is absent. At the same time, they rarely offer price breaks for adopting boilerplate, suggesting that at least some of the cost savings from consumer boilerplate may end up in the coffers of insurance firms rather than their clients. Insurers are surprisingly skeptical about the value of terms that have particularly excited proceduralists and consumer contract scholars—arbitration and liability waiver clauses—and believe their spread does not materially affect the risks that they insure.

Recommended Reading: David A. Hoffman and Rick Swedloff, Insurers as Contract Influencers (July 29, 2024).

November 7, 2024, 4 – 5 p.m.
Roy Baharad, Ph.D. Candidate, University of Chicago

Liability for harm not only incentivizes individuals to exercise optimal care and guarantees compensation to victims; it also serves the interest of potential injurers. The prospect of liability equips subjects with a “right to be sued,” which enables them to credibly signal their prudence in potentially harmful interactions, thus substantiating trust among counterparties. Liability for medical malpractice, for instance, bolsters the reliability of physicians exactly because they would be the ones suffering the cost of inadequate treatment. Oddly, however, individuals and businesses regularly waive their “right to be sued” by purchasing liability insurance. At its core, insurance is thus in tension with the informational power of liability. This talk examines when and how insurance might undermine credibility and attenuate policyholders’ reliability in the eyes of actors with whom they interact—business counterparties, employees, investors, audiences, regulators or patients.

Recommended Reading: Roy Baharad, Reliability Insurance

November 21, 2024, 4 – 5 p.m.
Dr. Franziska Arnold-Dwyer, University College London

The contractual relationships between an insurer and its policyholders contains enormous potential for insurers to support their policyholders to reduce environmentally harmful activities and take adaptation measures that make their property more resilient to climate risks. But there are important legal pitfalls here as well. This talk examines enabling approaches throughout the policy life cycle, including raising policyholder awareness of climate risk and climate change mitigation/adaptation measures, assessing policyholders’ climate-related risk profiles at the pre-contractual stage, price signalling, exercising influence through terms and conditions, and green claims and reinstatement.

Recommended Reading: Franziska Arnold-Dwyer, A Legal Framework for Net Zero Aligned Insurance Products, 29 Conn. Ins. L.J. 1 (2022-3).

December 5, 2024, 4 – 5 p.m.
Chaim Saiman, J.D., Villanova Law School

Courts never tire of saying an insurance policy is “just a contract” and subject to ordinary rules of contract law, especially the plain language approach that strives for formal neutrality between the parties. Yet courts also frequently rely on a narrative that an insurance policy strives to be a “just contract” with special pro-policyholder rules that reach beyond the plain language. How is insurance simultaneously “just a contract” and a “just contract?” When the issue relates to scope or breadth of coverage—whether a loss is included within the bounds of the policy—strict construction gains the upper hand. But when the focus is on the suite of rights that flow from coverage—such as expanded remedies available upon an insurer breach—courts craft coverage rights which are deeper than what can be derived from the plain meaning of the policy. This talk demonstrates the importance of this distinction and demonstrates its implications.

Recommended Reading: Chaim Saiman, Is Insurance “Just a Contract” or a “Just Contract”?, 83 Md. L. Rev. 819 (2024).

Spring 2024

January 25, 2024, 4 – 5 p.m.
Susan Doering, Willis Towers Watson
Michelle Radcliffe, Willis Towers Watson
Martin Lockman, Sabin Center for Climate Change Law, Columbia University

Climate change creates risks to health, property, and earnings. It also creates liability risk when injured parties sue entities for which insurers have provided coverage. In this talk, the authors assess the magnitude of such risks (which depend both on real world physical systems and on policy language and its interpretation) and suggest how they can be mitigated.

Recommended Reading:
White Paper: Climate Litigation Risk — Is there shelter from the storm?

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February 22, 2024, 4 – 5 p.m.
Kenneth Abraham, University of Virginia School of Law
Catherine Sharkey, New York University School of Law

The glaring gap in tort theory is its failure to take adequate account of liability insurance. Most of tort theory fails to recognize the central role that liability insurance plays in tort law and litigation, or mentions liability insurance only briefly, treating it as exogenous to tort law itself, as if it were merely a contingent source of outside financing, like a bank that passively guarantees a loan, rather than recognizing its active and central role. It is no exaggeration to say that liability insurance played a defining role in creating modern tort liability, and that modern tort liability would not look like at all like it looks today if liability insurance had not existed and influenced tort law’s development in the ways that it did.

Recommended Reading:
Abraham, Kenneth S. and Sharkey, Catherine M., The Glaring Gap in Tort Theory, 133 Yale L.J. 2165 (2024).

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March 7, 2024, 4 – 5 p.m.
Johnny Tang, Cornell University

This presentation examines the consequences of competition between jurisdictions in the U.S. life insurance industry. States vie to attract insurers by setting lower capital requirements, but the costs of such actions are borne by consumers in other states. The paper documents empirical evidence of competition between state regulators and its effects on the supply of life insurance. It then develops a quantitative model of the insurance market to evaluate the effects of this competition. Its main finding is that competition leads regulators to set lower capital requirements, which increases default risks but also increases consumer surplus by lowering prices. On net, these effects decrease regulators’ utility based on regulators’ revealed-preference objective functions.

Recommended Reading:
Johnny Tang, Regulatory Competition in the US Life Insurance

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March 21, 2024, 4 – 5 p.m.
Travis Pantin, University of Connecticut School of Law

Actuarially fair insurance prices are not only efficient (in the sense of maximizing social welfare) but will also — under a reasonable set of assumptions — distribute the social surplus among insureds more equally than a pricing schedule that charges heterogeneous insureds the same amount. This “egalitarian” argument for actuarial fairness can help to explain the legal and social persistence of the claim that actuarially fair prices actually are fair. The persistence of such a claim is puzzling because, as the paper shows, the most common arguments in support of actuarially-fair prices (namely, those grounded in adverse selection concerns, and those grounded in the principle that each insured ought to “carry his own weight”) fail, even on their own terms. The egalitarian argument for actuarial fairness provides an analytically clear articulation of what may be the true motivating intuition for many advocates of actuarial fairness. Shedding light on this framework, and its underlying assumptions, will help us better to understand the strengths and limitations of good faith arguments in favor of actuarial fairness.

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April 4, 2024, 4 – 5 p.m.
Michael Geruso, Economics, University of Texas at Austin
Timothy Layton, Harvard Medical School
Adam Leive, Goldman School of Public Policy, University of California, Berkeley

Existing research on selection in insurance markets focuses on how adverse selection distorts prices and misallocates products across people. This ignores the distributional consequences of who pays the higher prices. In this talk, the authors show that the distributional incidence depends on the correlations between income, expected costs, and insurance demand. They discuss the general implications for the design of subsidies and mandates when policymakers value both equity and efficiency. Then, in an empirical case study of a large employer, they show that the incidence of selection falls on higher-income employees, who are more likely to choose generous health insurance plans.

Recommended Reading:
Michael Geruso, Tim Layton, and Adam Leive, The Incidence of Adverse Selection: Theory and Evidence from Health Insurance Choices

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April 18, 2024, 4 – 5 p.m.
Michael Gropper, University of North Carolina Kenan-Flagler Business School

Economic theory predicts that wealthier people should buy less insurance, and should self-insure through saving instead, since insurance entails monitoring costs. But using a large administrative data set, the author finds that the wealthy have better life and property insurance coverage. Wealth-related differences in background risk, legal risk, liquidity constraints, financial literacy, and pricing explain only a small fraction of the positive wealth-insurance correlation. The positive wealth-insurance correlation persists in individual fixed-effects models estimated using 2,500,000 person-month observations. The fact that the less-wealthy have less coverage might increase financial disparities among households.

Recommended Reading:
Michael Gropper and Camelia M. Kuhnen, Wealth and Insurance Choices: Evidence from U.S. Households, Journal of Finance, Forthcoming.

Fall 2023

September 7, 2023, 4 – 5 p.m.
Liran Einav, Economics, Stanford University

Insurance markets are frequently subject to pressures from selection–insurance purchasers are not a random sample of all potential customers. Rather, those who want/need insurance the most are often the riskiest and thus the highest-cost to insure; those who are least likely to purchase insurance are often the best risks and the cheapest to insure. Under these conditions, Supply and Demand–the mainstay of traditional economic analysis–are no longer independent, because any individual’s decision to buy insurance changes the riskiness of the insurance pool as a whole, and hence the insurer’s cost of supplying it. Professor Einav and co-authors have developed a compelling and intuitive framework for evaluating the complex welfare implications of selection, and this talk will explain his theoretical insights and summarize some recent empirical work that puts them to use in evaluating real-world insurance markets.

Recommended Reading:
(1) For a straightforward introduction to the basic framework: L. Einav & A. Finkelstein, Selection in Insurance Markets: Theory and Empirics in Pictures, 25 J. Econ. Perspectives 115 (2011)
(2) For a survey of recent empirical work using the framework: L. Einav & A. Finkelstein, Empirical Analysis of Selection and Welfare in Insurance Markets: A Self-Indulgent Survey, Geneva Risk & Insurance Review (2023)
(3) For a popular account of selection in insurance markets and the complex welfare problems it creates, L. Einav, A. Finkelstein & R. Fisman, Risky Business (2023).

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September 21, 2023, 4 – 5 p.m.
Jay Feinman, Rutgers Law School

Effective markets require comparison shopping, which enables competition. But comparison of insurance products is virtually impossible because insurers do not make policies readily available, and consumers would have a hard time reading and understanding them if they did. In this talk, Professor Feinman will describe two potential solutions to this problem. The “Homeowners Insurance Coverage Summary” provides a template for an accessible summary of key terms, following the example of the Affordable Care Act’s Summary of Benefits and Coverage. “RU InsureScore” gives a Consumer Reports-type ranking, rating each company’s policy on a 100-point scale and rating the policy overall and its key components on a five-star scale, accompanied by brief comments. Professor Feinman will describe the development and contents of the project, including its methodology, presentation, aims, and will explore recommendations for future action by state insurance regulators.

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October 5, 2023, 4 – 5 p.m.
Deborah Widiss, Indiana University

Federal law fails to guarantee new parents or family caregivers paid time off from work. A growing number of blue-leaning states have addressed this gap by enacting comprehensive, paid family and medical leave laws, typically funded by a small payroll tax. A new—and quite different—approach is expanding rapidly in red-leaning states: authorization of commercial “Family Leave Insurance” to be marketed to employers. In other words, this is an opt-in privatized approach to family leave policy, packaging family leave with group short-term disability policies. However, only about 40% of American workers, and just 22% of low-wage workers, receive short-term disability benefits from their employers—and most policies replace only 50-60% of regular wages. By contrast, states that have enacted paid leave laws funded by a payroll tax typically cover virtually all workers, and most replace 80-95% of regular wages (up to a cap). The talk suggests provisions that would help opt-in policies actually meet the needs of new parents and family caregivers. It also explores potential adverse selection challenges that may arise under an opt-in approach. Authorization of opt-in insurance is better than nothing, but it is likely that both workers and businesses are better served by comprehensive paid leave laws.

Recommended Reading:
D. A. Widiss, Privatizing Family Leave Policy: Assessing the New Opt-in Insurance Model (May 24, 2023). 55 Seton Hall Law Review 1543 (2023), Indiana Legal Studies Research Paper No. 506.

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November 2, 2023, 4 – 5 p.m.
Shauhin Talesh, University of California, Irvine

Cyber risks–loss exposure associated with the use of electronic equipment, computers, information technology, and virtual reality–are among the biggest threats facing businesses and consumers. Despite these threats, prevailing research suggests that private organizations are not significantly changing their behavior in response. Although many organizations do have formal cybersecurity policies in place, the majority believe they are insufficiently prepared for a data breach, have not devoted adequate money, training, and resources to protect consumers’ electronic and paper-based information from data breaches, and fail to perform adequate risk assessments. Drawing on empirical observations over the past 5 years, this talk offers an explanation for why insurers who manage cybersecurity and privacy law compliance among organizations have not been more successful in curtailing breaches. The analysis draws on Talesh’s “new institutional theory of insurance,” which explains how insurers shape the content and meaning of law among organizations that purchase insurance. In response to vague and fragmented privacy laws and a lack of strong government oversight, insurers offer cyber insurance and a series of risk-management services to their customers. These services convey legitimacy to the public and to insureds, but fall short of improving the robustness of organizations, rendering them largely symbolic. Cyber insurers and managed security companies have flooded the market with high-level technical tools that they claim mitigate risk; but all they’ve really accomplished is to institutionalize a norm that policyholders need these tools to avoid cybersecurity incidents. Federal and state regulators and industry-based rating agencies have deferred to cyber insurers, without evidence that these tools actually improve security.

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November 16, 2023, 4 – 5 p.m.
Alon Rubinstein, Ph.D. Candidate in Economics, University of California, Berkeley

A key insight from the economics of selection markets is that competition disciplines sellers to customize coverage and premiums optimally. But is this the case? Using data from one of the largest Israeli commercial auto insurance providers, an affiliate of a multinational insurance company, Alon Rubinstein finds there is too little adjustment in the “intensive margin” (pricing). Premiums barely change with expected costs as projected by pre-determined factors (vehicle age) and signals (claims history). At the same time, there is too much adjustment in the extensive margin (acceptance/rejection of the customer), with an excessive denial of insurance in response to recent claims. Using unique grading documents, Rubinstein integrates the insurer’s subjective risk assessment into the study of insurance markets. Rubinstein finds that the insurer’s risk assessment outweighs recent claims and misvalues vehicle age. Structural model estimates suggest that insurers enjoy incumbency advantages over their own customers, and clients are rationally inattentive to competitors’ pricing unless they are faced with a price increase. Both of these channels allow sub-optimal insurer behavior to persist. Finally, Rubinstein finds that supply-side behavioral frictions, which result in excessive denial, mainly harm disadvantaged customers—single-fleet clients of old vehicles—and diminish with the client’s fleet size.

Recommended Reading:
A. Rubinstein, Behavioral Professionals: Evidence from the Commercial Auto Insurance Industry, February 15, 2023.

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November 30, 2023, 4 – 5 p.m.
Mallory Hope, Postdoctoral Fellow, Harvard Center for History and Economics

Some of most fascinating scholarship on the transatlantic slave trade in recent years has explored the trade’s demand side. To ensure the success of their operations, European slave traders had to make a close study of changing consumer tastes in the African ports they targeted and procure an attractive variety of products from Brazilian tobacco to Indian textiles. Slave traders’ tactics for mitigating risk, however, remain largely in the dark. What proportion of slave-trading ships were insured? What special terms, if any, were included in slave insurance contracts? What premiums were charged on these ships and their human cargoes, and how did the rates compare with insurance on vessels and cargoes in other lines of trade? Were slave-trading voyages customarily insured in certain markets, such as London? In her presentation, Mallory Hope lays out the types of historical sources that can be used to respond to these questions, along with the methodological challenges they present, and Hope will begin to compare underwriters’ and slave traders’ practices on the Continent and in the British Atlantic world.

Recommended Reading:
M. Hope, Risk and Uncertainty in France’s Atlantic Slave Trade, __ Int’l J. Maritime Hist. 1 (2023).

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Spring 2023

January 26, 2023, 4 – 5 p.m.
Elizabeth Anderson, Philosophy, University of Michigan

Should protections for old age and disability be based on individual savings or social insurance? This disagreement can be traced to rival plans advanced in the late 18th century by Joseph Priestley (famous chemist, Unitarian minister, and political economist) and Thomas Paine (participant in the American and French Revolutions). This presentation shows how their proposals originated from different interpretations of the Protestant work ethic, which continues to influence current debates.

Recommended Reading:
(1) Elizabeth Anderson, Hijacked: How Neoliberalism Turned the Work Ethic against Workers, and How Workers Can Take it Back, (Forthcoming, Cambridge University Press)
(2) Elizabeth Anderson, “Common Property,” Boston Review (July 25, 2016)

February 9, 2023, 4 – 5 p.m.
Katherine R.H. Wagner, Economics, University of British Columbia

This talk discusses demand for flood insurance and the implications for the welfare effects of currently proposed reforms to this market in the United States. Individuals’ willingness to pay for such insurance is remarkably low: even in high-risk flood zones, fewer than 60 percent of homeowners purchase flood insurance, despite premiums that are substantially better than actuarially-fair. The decision to purchase flood insurance depends on observable differences in adaptation, but does not seem to be based on private information about risk. Together, these findings suggest that policymakers may underestimate the welfare costs from current reform efforts to implement actuarially fair premiums.

Recommended Reading:
(1) https://www.aeaweb.org/articles?id=10.1257/pol.20200378

February 23, 2023, 4 – 5 p.m.
Tom Baker, University of Pennsylvania School of Law
Anja Shortland, King’s College London
Crime creates demand for insurance but supplying insurance may promote crime. The authors conceptualize insurance and crime as binary stars, co-evolving as each innovates. They examine five case studies: auto theft, art theft, kidnap and hijack for ransom, ransomware, and payment card fraud. They find insurers engage with insureds and third parties to reduce criminal opportunities, limit damage, salvage stolen property, cap criminal profits, and increase the risk of detection. “Insurance as crime governance” erects barriers to opportunistic crime, engages in strategic interaction with organized crime, tolerates crime if prevention is too costly, and avoids covering non-profit-motivated crimes.

March 9, 2023, 4 – 5 p.m.
Omri Ben-Shahar, University of Chicago Law School

Telematic devices installed in cars offer significant welfare gains via Usage Based Insurance, which calibrates premiums to an insured driver’s risky behavior. Sophisticated empirical work robustly reveals that UBI generates robust gains in safety (a roughly 30 to 50 percent reduction in fatal accidents), and lower premiums. Yet there is a strong undercurrent of hostility to telematics on the part of regulators. This talk reviews the substantial safety improvements that UBI makes available, and evaluates the equity, privacy and transparency concerns that may accompany the technology. It concludes that the benefits significantly outweigh the costs, and that regulatory hostility is therefore unwarranted, although some regulation is certainly appropriate.

March 23, 2023, 4 – 5 p.m.
Guido Rossi, School of Law, University of Edinburgh

The rise of a local insurance market in sixteenth-century London was accompanied by a number of problems, both legal and institutional. Most uncommonly for England, the solution devised by the authorities was to write an insurance code, which happened to be the most advanced and sophisticated piece of legislation on insurance in sixteenth-century Europe.

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April 6, 2023, 4 – 5 p.m.
Sangmin Oh, University of Chicago, Booth School of Business

Broadly interpreted, social inflation refers to shifts in the insurer’s loss distribution due to factors such as large jury awards and broader definitions of liability. This talk reports on an empirical study that uses novel data to show that social inflation poses a meaningful source of aggregate risk to the insurance sector. In particular, it finds that the price impact of social inflation is greater in regions with higher legal exposure, greater for insurers that are more financially constrained, and is economically significant even for insurers not directly affected by verdicts and settlements. An accompanying model shows that the effect persists through two channels: the increase in marginal cost of insurance and the interaction of increased uncertainty with capital regulation.

Recommended Reading:
Social Inflation (October 5, 2022).

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April 20, 2023, 4 – 5 p.m.
Chris Robertson, Boston University School of Law
Wendy Epstein, DePaul University College of Law

Policies to encourage health insurance uptake have focused on consumers’ economic self-interest, attempting to show that insurance is a good deal or to sweeten the deal with subsidies or penalties. Still, some consumers see insurance as a bad deal, either because they rationally exploit private risk information or irrationally misperceive the value due to cognitive biases. As a result, about 30 million Americans lack coverage, including many who could afford it. Might there be other ways to promote the takeup of health insurance? Many citizens view health insurance through a moral lens, and our speakers report on experimental findings suggesting that moral framing (pitching insurance as helping others, helping community, or taking responsibility) could drive millions of additional Americans to shop for health insurance.

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Fall 2022

September 8, 2022, 4 – 5 p.m.
Robin Pearson, Professor of Economic History, University of Hull (UK)

System collapse is less common in insurance than in the history of other financial institutions. One exception was the crisis at the Lloyd’s insurance market in the late twentieth century. Hitherto, explanations of the crisis have focused on the effects of catastrophic losses and poor governance, but this talk argues that multiple delusions of competence among internal and external players were also at work.

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September 22, 2022, 4 – 5 p.m.
Robert Schindler, Rutgers University Business School
Mathew S. Isaac, Seattle University Business School

Insurance may often be purchased for other-than-rational motives. This talk reviews the speakers’ recently published experimental evidence for one such nonrational motive, the feeling that having insurance will cause the insured mishap to be less likely to occur. They also discuss the likely presence of two additional types of nonrational motives for buying insurance, and offer some practical implications.

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October 6, 2022, 4 – 5 p.m.
Allison Hoffman, University of Pennsylvania Law School

Health insurance in the U.S. has largely been tied to work since the mid-20th century, but they may become less connected in the future. Job-based coverage has been weakening in many ways. The COVID-19 pandemic further exposed problems with health insurance being tied to work. This talk summarizes the history of health insurance, why job-based coverage is faltering, and how health insurance could and should evolve.

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October 20, 2022, 4 – 5 p.m.
John Goldberg, Harvard Law School
Benjamin Zipursky, Fordham Law School

John Goldberg and Benjamin Zipursky, the two most-cited torts scholars in the United States today, join us to discuss their influential ‘civil recourse’ theory of tort law, recently laid out in their book Recognizing Wrongs (2020). The webinar will address how their account – which focuses mainly on the ‘victim’ and the ‘wrongdoer’ – can explain the pervasive and crucial presence of liability insurance in the tort system. It will also consider questions such as these: Is a morally inflected interpretation of tort law applicable to today’s world, in which settlement is the rule and adjudication to judgment the exception? What does contemporary tort theory have to say about the validity of cost-spreading rationales and mass tort litigation? When, if ever, should no-fault or other insurance mechanisms replace tort law as a means of dealing with the accidents characteristic of our modern, hi-tech world?

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November 3, 2022, 4 – 5 p.m.
Daniel Sullivan, Holwell Shuster & Goldberg
Seth Schafler, Covington & Burling

Two of the chief litigators involved in one of the most closely-watched insurance law cases in recent years, J.P. Morgan Securities Inc. v. Vigilant Insurance Co., join us to discuss the many interesting questions it raised. The case, recently decided by the New York Court of Appeals, asked whether a $140 million “disgorgement” payment to the SEC for alleged illegal trading practices was a covered loss under a policy that provided coverage for “wrongful acts” but not for “fines and penalties imposed by law.” The case raised some profound questions, including: What types of losses (e.g., intentional harm, punitive damages, etc.) are uninsurable as a matter of public policy? To what degree should labels like “penalty” or “disgorgement,” when used in a non-insurance context, be allowed to determine coverage under an insurance policy that uses similar terms? The Court of Appeals opinion is available here.
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November 17, 2022, 4 – 5 p.m.
Mark Egan, Harvard Business School

Variable annuities are popular retirement products, with over $2 trillion in assets in the United States. Brokers receive substantial commissions from insurers for selling these products, and the commissions are higher for annuities with higher expenses and more ex-post complaints. But variable annuity sales are roughly four times as sensitive to brokers’ financial interests as to investors’. The Department of Labor’s 2016 fiduciary rule led to a 52% drop in high expense annuities, and on conservative assumptions, it increased investor welfare.

December 1, 2022, 4 – 5 p.m.
Mark Pauly, Wharton School, University of Pennsylvania

This presentation, Externalities in the Wildland – Urban Interface: Private Decisions, Collective Action, and Results from Wildfire Simulation Models for California, addresses the fact that much of the property damage from wildfires occurs when fires spread into built-up areas, the wildland/urban interface. In these areas, fire spreads from house to house, as embers from one burning structure ignite neighboring ones. Homeowners can take measures to mitigate the chances that their house will ignite, but in doing so, they tend to ignore the benefits their actions create for their neighbors. The size of this external benefit depends on the assumed process of fire spread, which in turn depends on building density and the effectiveness of mitigation. An empirical model of this externality reveals the degree of underinvestment that individuals will undertake, and the corrective actions (including building code rules and subsidies for insurance premiums on mitigation activities). Because it will rarely be optimal to mitigate all homes, the optimal solution may involve unequal treatment and raise equity issues. Download the working paper.

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Spring 2022

January 20, 2022, 4 -5 p.m. ET
Hannah Farber, Columbia University

American maritime insurers used their position at the pinnacle of global trade to shape the new nation. The international information they gathered and the capital they generated enabled them to play central roles in state building and economic development. During the Revolution, they helped the U.S. negotiate foreign loans, sell state debts, and establish a single national bank. Afterward, they increased their influence by lending money to the federal government and to its citizens. By the early nineteenth century, insurers were no longer just risk assessors. Prof. Farber’s new book Underwriters of the United States reveals insurers as nation builders and market makers.

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January 27, 2022, 4 – 5 p.m. ET
Kenneth Abraham, University of Virginia School of Law
Daniel Schwarcz, University of Minnesota Law School

Insurance law scholars have long believed that insurance does more than just transfer risk: it plays a key role in regulating the conduct of policyholders by creating incentives for risk management and in some cases requiring or forbidding certain behavior. Some have claimed that the power of insurance can be a potent substitute for direct regulation by government. Professors Abraham and Schwarcz argue that the ability of insurance to substitute for governmental regulation is more limited than we have realized.

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February 3, 2022, 4 – 5 p.m. ET
Justin Sydnor, University of Wisconsin-Madison School of Business

Empirical evidence shows that for many employers who offer different levels of health insurance coverage (e.g., a high-deductible option alongside a more generous plan), one of the options ends up dominating the other, meaning that one plan is simply worse than the other for all consumers. This seems to occur because employers pass through cost differentials between the employees who opt into low vs. high coverage (typically younger/healthier vs. older/less healthy). Offering different coverage options (without any constraints on how those options are priced to the employees) creates a back-door that permits differential benefits based on health status. This talk explores the empirical and theoretical aspects of consumers choice of health insurance plans, and suggests ways that regulation should be designed to cope with consumers’ cognitive infirmities.

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February 17, 2022, 4 – 5 p.m. ET
Casper de Jong, retired insurance executive

Adverse selection occurs when insurance purchasers know more about their own riskiness than insurers do, and use that knowledge in deciding how much or what kind of insurance overage to purchase. Theory and much regulatory practice assume that this kind of informational asymmetry (favoring policyholders) is universal; but Mr. de Jong challenges this basic assumption, arguing instead that insurers typically know more about their policyholders’ riskiness than the policyholders themselves do. This talk explores the causes and consequences of this informational reversal.

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February 24, 2022, 4 – 5 p.m. ET
Kyle Logue, University of Michigan Law School

Cyber-ransom poses difficult policy questions. On the one hand, the presence of insurance may actually increase the profitability of ransom-ware attacks and create incentives for more of them. On the other, properly constructed and well-regulated insurance offers a variety of pre- and post-breach services that can reduce the likelihood and severity of ransomware attacks. This talk discusses how best to structure insurance regulation to handle these difficult tradeoffs.

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March 3, 2022, 4 – 5 p.m. ET
Ronen Avraham, Tel Aviv University Faculty of Law

Insurance has well-known and important benefits; but it has an overlooked dark side as well. Insurers sometimes deny coverage unjustly, shifting short-term risks to insureds (or their victims) rather than reducing them. Worse, insurers might also act to increase long-term risks: They may provide suboptimal incentives for insureds to take care, as well as present wrongdoers with incentives to target insureds as victims. Further, insurers may block technological progress and lobby for inefficient regulation, even at the expense of more long-term risks to their insureds and society. Insurers may even invest in risky products and activities to increase the demand for insurance coverage against these very same risks. Wise policy requires taking account of the dark side of insurance.

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March 10, 2022, 4 – 5 p.m. ET
Peter Kornman, retired attorney, Davis, Polk & Wardwell

Federal legislation known as the Protection of Lawful Commerce in Arms Act (PLCAA) poses significant limits on the ability of state governments to regulate what would otherwise be the tortious behavior of arms manufacturers. This talk explores how state governments can operate at the intersection of insurance regulation, McCarran/Ferguson, and the PLCAA to regulate gun manufacturer liability.

March 24, 2022, 4 – 5 p.m. ET
Geoffrey Clark, State University of New York at Potsdam

Insurance is commonly seen as a scientific application of statistical collection and probabilistic analysis to infer the value of risks. Viewed historically, however, insurance arose in a wider philosophical, religious, and political matrix in which claims to scientific knowledge and precision were just one, and not even the most important, component. This talk will survey how the origins of the life insurance business offer clues about how insurance was understood in its formative decades and how many people may understand the way insurance operates today.

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April 7, 2022, 4 – 5 p.m. ET
Peter Siegelman, University of Connecticut School of Law
Gideon Parchomovsky, University of Pennsylvania Law School & Hebrew University Faculty of Law

Conventional moral hazard occurs when the transfer of risk from policyholder to insurer leads the former to reduce its level of precautions. We surface a related phenomenon: insurance can lead third parties (who are outside of the insurance contract) to increase loss- or claims-causing behavior. Such negative externalities from insurance are widespread, and the authors offer an explanation for their origins and discuss some policy implications.

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April 14, 2022, 4 – 5 p.m. ET
Carolyn Kousky, University of Pennsylvania

The mid-Atlantic region of the United States is experiencing accelerated rates of sea level rise, increasing flooding. And the problem is worst for lower-income residents. Unfortunately, these same residents struggle with access to the needed financial resources to recover from floods. Such recovery is a necessary condition for broader urban disaster resilience. Despite this, flood coverage for low and middle-income residents is an under-researched aspect of climate adaptation. This talk reports on ongoing research to promote accessible flood insurance for lower-income communities, with a particular focus on New York City.

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Fall 2021

January 21, 2021, 4 -5 p.m.
Michael Abramowizc, George Washington Law School

Nobel Laureate Robert Shiller has argued for livelihood insurance, a financial derivative that would provide compensation when many individuals in a particular occupation suffer losses. This talk will explore why livelihood insurance did not emerge in time to protect workers in the last pandemic and what the government can do before the next crisis to protect workers in vulnerable professions.

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February 4, 2021, 4 -5 p.m.
Ray Farmer, South Carolina Department of Insurance

South Carolina Director of Insurance Ray Farmer became the NAIC president in January 2020, expecting the major issues would include the long-term care insurance market, climate and resiliency, continued uncertainties with the ACA and access to affordable health insurance, international regulatory cooperation, and the growing role of Big Data and predictive analytics. Then the pandemic arrived, demanding immediate regulatory attention and leadership, and a spring and summer of protests moved race and racism to the forefront. Several months after his term, Director Farmer will discuss 2020 and the NAIC.

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February 11, 2021, 4 -5 p.m.
Daniel Schwarcz, University of Minnesota Law School

Historically, health insurance contracts have required coverage of virtually all “medically necessary,” “non-experimental,” care, with these terms being defined through broad standards. In recent years, however, health insurers’ contracts and practices have moved towards a more rules-based approach for defining covered health care. This talk explores how this shift undermines the effectiveness of traditional legal tools designed to constrain the risk of health insurers overreaching in coverage determinations, such as litigation, external review, internal review, and coverage mandates.

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The Impact of Monitoring Programs in U.S. Auto Insurance
February 18, 2021, 4 -5 p.m.
Shoshana Vasserman, Stanford Business School

What happens when insurers gain better information about the riskiness of their customers? The question is of tremendous importance as new technologies allow insurers to monitor customers’ behavior and use that information to price their product. But little is known about the equilibrium effects of this kind of information–how is it priced, who agrees to provide it, what effect it has on competition among insurers, and how it affects overall welfare. This talk offers an empirical perspective on these issues.

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April 1, 2021, 4 -5 p.m.
Patricia Born, Florida State University

Outcomes of medical malpractice lawsuits reflect a great deal of uncertainty for insurers, despite their access to historical claims experience and evolving sources of “Big Data.” Variations in how people recover from certain types of injuries and how juries perceive fault, for example, can have large effects on claim payout variability. This presentation explores the role of injury types, juries, and other factors that may explain why an insurer’s initial assessment of how a claim will evolve is often off the mark.

April 15, 2021, 4 -5 p.m.
Asaf Lubin, University of Indiana Law School

It is widely believed that the adoption of autonomous vehicles will lead to a continual decline in the frequency of accidents and a shift towards products liability that will bring an end to automobile insurance as we know it. This presentation will make the case that automobile insurance is not going anywhere, though insurers, regulators, and manufacturers will need to adapt to a changing mobility environment.

April 22, 2021, 4 -5 p.m.
John Cogan, University of Connecticut School of Law

Gender rating—charging women higher premiums than men—is justified on the basis of actuarial fairness (each gender bears the cost of its own risk and does not subsidize the other). This reasoning ignores an underlying theoretical flaw in insurance classification theory: no matter what variables an insurer uses to classify risks, there will always be cross-subsidies and risk-based unfairness. Thus, Professor Cogan argues that using gender as a rating variable is a policy choice by insurers, not an actuarial or economic necessity.

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April 29, 2021, 4 -5 p.m.
Susan Donegan, National Council on Compensation Insurance

Workers Compensation is the nation’s oldest social insurance system and while it has adapted as the workplace evolves, its core components of payment for medical care and income replacement due to work-place injuries and disease remain the same. With COVID-19, the importance of these benefits, their cost, and the difficulties in demonstrating causality between infection and the workplace, has led states to review their workers compensation systems and consider whether to rebalance some of its central components.

Spring 2023

January 26, 2023, 4 – 5 p.m.
Elizabeth Anderson, Philosophy, University of Michigan
Should protections for old age and disability be based on individual savings or social insurance? This disagreement can be traced to rival plans advanced in the late 18th century by Joseph Priestley (famous chemist, Unitarian minister, and political economist) and Thomas Paine (participant in the American and French Revolutions). This presentation shows how their proposals originated from different interpretations of the Protestant work ethic, which continues to influence current debates.

February 9, 2023, 4 – 5 p.m.
Katherine R.H. Wagner, Economics, University of British Columbia
This talk discusses demand for flood insurance and the implications for the welfare effects of currently proposed reforms to this market in the United States. Individuals’ willingness to pay for such insurance is remarkably low: even in high-risk flood zones, fewer than 60 percent of homeowners purchase flood insurance, despite premiums that are substantially better than actuarially-fair. The decision to purchase flood insurance depends on observable differences in adaptation, but does not seem to be based on private information about risk. Together, these findings suggest that policymakers may underestimate the welfare costs from current reform efforts to implement actuarially fair premiums.

Recommended Reading:
(1) https://www.aeaweb.org/articles?id=10.1257/pol.20200378

March 9, 2023, 4 – 5 p.m.
Omri Ben-Shahar, University of Chicago Law School
Telematic devices installed in cars offer significant welfare gains via Usage Based Insurance, which calibrates premiums to an insured driver’s risky behavior. Sophisticated empirical work robustly reveals that UBI generates robust gains in safety (a roughly 30 to 50 percent reduction in fatal accidents), and lower premiums. Yet there is a strong undercurrent of hostility to telematics on the part of regulators. This talk reviews the substantial safety improvements that UBI makes available, and evaluates the equity, privacy and transparency concerns that may accompany the technology. It concludes that the benefits significantly outweigh the costs, and that regulatory hostility is therefore unwarranted, although some regulation is certainly appropriate.

March 23, 2023, 4 – 5 p.m.
Guido Rossi, School of Law, University of Edinburgh
The rise of a local insurance market in sixteenth-century London was accompanied by a number of problems, both legal and institutional. Most uncommonly for England, the solution devised by the authorities was to write an insurance code, which happened to be the most advanced and sophisticated piece of legislation on insurance in sixteenth-century Europe.

April 6, 2023, 4 – 5 p.m.
Sangmin Oh, University of Chicago, Booth School of Business
Broadly interpreted, social inflation refers to shifts in the insurer’s loss distribution due to factors such as large jury awards and broader definitions of liability. This talk reports on an empirical study that uses novel data to show that social inflation poses a meaningful source of aggregate risk to the insurance sector. In particular, it finds that the price impact of social inflation is greater in regions with higher legal exposure, greater for insurers that are more financially constrained, and is economically significant even for insurers not directly affected by verdicts and settlements. An accompanying model shows that the effect persists through two channels: the increase in marginal cost of insurance and the interaction of increased uncertainty with capital regulation.

Recommended Reading:
Social Inflation (October 5, 2022).

April 20, 2023, 4 – 5 p.m.
Chris Robertson, Boston University School of Law
Wendy Epstein, DePaul University College of Law
Policies to encourage health insurance uptake have focused on consumers’ economic self-interest, attempting to show that insurance is a good deal or to sweeten the deal with subsidies or penalties. Still, some consumers see insurance as a bad deal, either because they rationally exploit private risk information or irrationally misperceive the value due to cognitive biases. As a result, about 30 million Americans lack coverage, including many who could afford it. Might there be other ways to promote the takeup of health insurance? Many citizens view health insurance through a moral lens, and our speakers report on experimental findings suggesting that moral framing (pitching insurance as helping others, helping community, or taking responsibility) could drive millions of additional Americans to shop for health insurance.