Insurance plays a significant role in the global economy, generating trillions of dollars a year in revenue and safeguarding property and investments around the world. Given the importance of insurance to international markets, it might be safe to assume that parties and practitioners would have a detailed knowledge of how disputes involving insurance are resolved. However, even those who work in insurance law often know very little about these highly specialised matters.

This phenomenon is of course problematic for both parties (who may not appreciate the scope and nature of the dispute resolution options that are available to them) as well as lawmakers (who may be forced to make critical determinations about the content and shape of the law without a proper understanding of how various mechanisms operate in a particular context). Confusion is particularly prevalent in matters involving international insurance and reinsurance, since these disputes are often resolved through arbitration rather than litigation. Although it is impossible to provide a comprehensive overview of all of the relevant issues, it is useful to identify three main areas of concern.

Tensions between international and domestic law

The first matter to discuss involves tensions between international and domestic law. This issue is illustrated by the ongoing debate in the US about the extent to which the McCarran-Ferguson Act reverse pre-empts certain legal principles in international disputes. The concept of reverse pre-emption is well known in the US insurance industry and involves situations in which Congress defers to state authority, thereby allowing state law to trump (i.e., reverse pre-empt) federal law.

Jan-Mar 2016 issue

University of Missouri