Insurance and the Law

abspara0010 Insurance and the law are interconnected. Legislation, court decisions, and regulations impact and influence the meaning of private and social insurance arrangements in society. While the law shapes and influences what insurance means in society, insurance also exerts a regulatory force over its subjects and acts as a form of governance beyond the state. Drawing from sociolegal scholars who study the gap between the law on the books and the law in action, this article explains the basic forms and functions of insurance in society and explores insurance’s intertwined relationship with the law. p0015 As Justice Black of the United States Supreme Court wrote in 1945: “Perhaps no modern commercial enterprise directly affects so many persons in all walks of life as does the insurance business. Insurance touches the home, the family, and the occupation or the business of almost every person in the United States” (United States v. South-Eastern Underwriters Association, 1945). p0020 The law shapes and influences what insurance means, while the law is simultaneously influenced by insurance. Courts interpret the meaning of insurance policies, statutes establish what social insurance and other public sector insurance arrangements are permitted, and insurance regulations attempt to enforce state insurance laws, promulgate rules and regulations, and conduct hearings to resolve disputed matters pertaining to insurance. Private insurance arrangements in particular depend on a well-defined and robust contract law and a regulated market. While the law influences insurance, insurance also exerts a regulatory force over its subjects and acts as a form of governance beyond the state. Moreover, the presence of liability insurance often shapes how tort lawsuits are structured. Insurance is also an ideological construct that influences the relationship between law and regulation, such that much of society is governed through risk, both within the boundaries of insurance but even beyond insurance. Although ideas about what is insurable and what should be insurable vary over time and location, it is clear that risk and insurance impact so many aspects of society. p0025 Drawing from sociolegal scholars who study the gap between the law on the books and the law in action, this article explains the basic forms and functions of insurance in society and explores the intertwined relationship of insurance and