Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims.
Regulation of insurance agencies
The origins of insurance policies in general differs through various countries, limited policies (particularly against
damage to homes) can be traced to the 17th and 18th centuries, though establishment of newer policies (such as health insurance
and car insurance) did not come until the 20th century. However, regulation on the insurance industry via law began in the
1940s in the United States, through several supreme court rulings. The first ruling on insurance had taken place in 1868 (in
the Paul v. Virginia ruling), with the supreme court ruling that insurance policy contracts were not in themselves commercial
contracts. This stance did not change until 1944 (in the United States v. South-Eastern Underwriters Association ruling),
when the Supreme court upheld a ruling stating that policies were commercial, and thus were regulatable as other similar contracts
Nowadays, many countries - and states in the United States - regulate insurance companies through laws, guidelines and
independent commissions and regulatory bodies. These laws and statutes ensure that the policy holder is protected against
bad faith claims on the insurers part, that premiums are not unduly high (or fixed), and that contracts and policies issued
meet a minimum standard.
A bad faith action may constitute several possibilities; the insurer denies a claim which is seemingly valid in the contract
or policy, the insurer refuses to pay out for an unreasonable amount of time, the insurer lays the burden of proof on the
insured - often in the case where the claim is unprovable. Other issues of insurance law may arise when price fixing occurs
between insurers, creating an unfair competitive environment for consumers. A notable example of this is where Zurich Financial
Services - along with several other insurers - inflated policy prices in an anti-competitive fashion. If an insurer is found
to be guilty of fraud or deception, they can be fined either by regulatory bodies, or in a lawsuit by the insured or surrounding
party. In more severe cases, or if the party has had a series of complaints or rulings, the insurers license may be revoked
In the case that an insurer declares bankruptcy, many countries operate independent services and regulation to ensure
as little financial hardship is incurred as possible (National Association of Insurance Commissioners operates such a service
in the United States).