AIA Issues Statement on Restatement of Law

WASHINGTON, May 19 -- The American Insurance Association issued the following statement by General Counsel and Senior Vice President J. Stephen Zielezienski ahead of the American Law Institute's (ALI) vote on a Restatement of Law dealing with liability insurance:

"A fair, reasonable insurance market requires that the insurer and the policyholder, at the beginning of the relationship, understand the risks each has agreed to bear.

"That contractual relationship and virtually every aspect of the insurance company's operations is subject to intense regulatory scrutiny.

"Regrettably, because ALI's restatement disregards laws and the regulatory oversight of insurers, as well as casts doubt on clear contractual language and settled law, if Tuesday's vote is not deferred or defeated, a short-sighted and unjust conclusion is the only possible outcome."

BACKGROUND:

According to the ALI's Revised "Style Manual," restatements are intended to be "clear formulations of common law and its statutory elements or variations and reflect the law as it presently stands or might appropriately be stated by a court." Despite this, on Tuesday, May 23, 2017, ALI will vote on a restatement of liability insurance law as a reform document, rather than as one that faithfully represents existing case law.

In addition to AIA's opposition, Dean Cameron, Director, Idaho's Department of Insurance, and Patrick McPharlin, Director, Michigan's Department of Insurance and Financial Services, have written the ALI to urge that the restatement not be approved without an opportunity for them to review it. Thomas Considine, CEO, National Conference of Insurance Legislators, also offered a strong objection to the approval of the draft restatement. Further, numerous individual insurers have written to the ALI to urge that it review the project further to correct serious issues with the draft. Likewise, the Defense Research Institute, representing more than 22,000 members of the defense bar, has urged members of the ALI to vote against final approval of this restatement.

Celebrating its 150th year in 2016, The American Insurance Association (AIA) is the leading property-casualty insurance trade organization, representing approximately 320 insurers that write more than $125 billion in premiums each year. AIA member companies offer all types of property - casualty insurance, including personal and commercial auto insurance, commercial property and liability coverage, specialty, workers' compensation, homeowners' insurance, medical malpractice coverage, and product liability insurance.