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Four Conceptions of Insurance

This Article identifies four conceptions of insurance that have operated in the
debates about insurance law in recent decades, analyzes these conceptions, and
examines the normative agendas that drive them. These are the contract, public
utility/regulated industry, product, and governance conceptions. Although these
conceptions adopt very different perspectives, each is a way of struggling with the
two fundamental questions that modern insurance law has continually faced. The
first question involves the extent to which the language of an insurance policy
should determine its legal effect. This is the insurance law version of the age-old
question concerning the validity of one-sided provisions in contracts of adhesion.
Because virtually all insurance policies, including high-end corporate insurance
policies, are standard-forms, it is a question at the core, not the periphery, of
insurance law. The second question involves the proper influence of what are
sometimes called “public law” values on the scope of private insurance coverage.
This is a question with which much of modern private law struggles. To what
extent should private law be about doing justice between two contracting parties,
and to what extent should it also be concerned with other, more nearly public law
matters? Public law matters such as the impact of litigation outcomes on the future
behavior of other parties or the equal treatment of similarly situated policyholders.
Ultimately, the Article argues, adopting a particular conception of insurance is no
substitute for making or rejecting the normative choices that each conception entails.
It is not our concepts, but our political, economic, and social values that underlie
and underwrite legal doctrines and practices. Nonetheless, sometimes we do not see
through our conceptual structures but instead are led around by them. This is part
of what is taking place in the contests among different conceptions of insurance. In
such circumstances, the kind of critical analysis this Article undertakes is required to
expose the normative agendas that are doing the actual work within each conceptual