National Disasters Implicate Property and Casualty Claims

   By Robert Hille, Partner, Kalison, McBride, Jackson & Murphy, P.A.

The World Trade Center attack, Hurricane Katrina and now the BP oil spill – three national disasters implicating coverage under several types of property and casualty policies, but with varying results depending on which state the claim is made.  Aside from the multistate impact these events have had, their sheer magnitude underscores the enormous effect they have on the public and the need for consistency.  Therefore, has the time now come for federal regulation of insurers?  For some time, the courts have recognized that the federal government has the ability to regulate the industry.  However, with the exception of TRIA as a temporary measure in response to the WTC attack, Congress has been reluctant to usurp the states’ regulation of insurers.

 

This hands off approach began with the McCarran Ferguson Act in 1945 at a time when risk was generally viewed as local in nature.  This is no longer the case as many carriers have become national in character and regional disasters have placed reserves at risks on an unprecedented scale.  While big government fears and concerns over delayed response to local losses will be the arguments against national regulations, these may be negligible and more than offset by the elimination of the huge cost of state regulations and consistency of response.

 

Indeed, consistency could be achieved similar to patent law by creating a centralized regulatory system with coverage determinations vested in one court such as the Court of Appeals for the Federal Circuit.

 

Will regulation respond to reality or will fear and partisan irrationality prevent us from being where we should be?  Is how we regulate insurance becoming dysfunctional and should states have any role in the future?  I welcome your thoughts and comments.

 

Robert B. Hille is a partner in the law firm of Kalison, McBride, Jackson & Murphy, P.A., in Warren, New Jersey. Concentrating on Insurance and Healthcare Law, Mr. Hille has extensive trial experience and has litigated a number of insurance coverage, healthcare, professional liability defense, dispute resolution, fraud and abuse, and regulatory matters. Mr. Hille is the co-author of LexisNexis Practice Guide New Jersey Insurance Litigation.

 

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