Insurance law

In a nutshell

Insurance 2

Insurance is the practice of hedging against financial risk; the practice and its fallout require a lot of legal work. Insurance and reinsurance (even insurers are vulnerable to financial risk and they transfer part of their risk on to reinsurers) are practiced by a significant number of specialist law firms and general commercial outfits across the USA. Insurance can be split into many sub-specialties (see below), and firms may offer all or some of these services. 

The regulation of insurance companies is split between the state and federal level: though most is done among states, which are responsible for investigating practices and regulating insurance rates, the National Association of Insurance Commissioners (made up of the chief regulators of 50 states) provides oversight across the industry at state level. Among its main responsibilities is to protect consumers and ensure uniform financial reporting. The Dodd-Frank Act also established the Federal Insurance Office (FIO), an organization within the US Treasury Department which analyzes risk or issues in the insurance market that could have any serious ramifications for the wider industry and US economy.

It's possible to insure pretty much anything against almost any eventuality. Put differently, insurance is taken out to cover risks including human error, accidents and natural disasters. The most common types of insurance that lawyers deal with are: insurance against the destruction of tangible assets (e.g. property); insurance against the loss of intangible assets (e.g. revenue streams); and insurance against mistakes made by professionals. Insurance lawyers work on cases related to property damage, product liability, fraud, insolvency, directors' and officers' liabilities (D&O), aviation, business interruption, mortgage losses, political events, technology, energy, environment, construction, finance... the list goes on. Disputes arise between the insured policyholder and the insurer; between the insured plus the insurer and another party; or between the insurer and the reinsurer.

Some lawyers specialize in the transactional aspects of the insurance industry, advising on tax, regulations, restructurings, drafting insurance policies, and M&A activity between insurance companies.


What lawyers do

Insurance litigation attorneys handle many different types of insurance-based claims and can be either prosecutors or defense attorneys. Some of the main areas include:

Commercial insurance disputes

  • Work on claims related to things as varied as properties damaged by flood or fires, oil rigs destroyed by hurricanes, or gold mines nationalized by socialist governments.
  • Work on disputes between insurers and the insured over insurance payouts and what insurance coverage consists of, or act for the insurer and the insured together in litigation with a third party.
  • Assess coverage and the insurer's liability.
  • Interview witnesses to find out how events occurred.
  • Value the claim and build up the case for what the client feels is an adequate settlement.
  • Attend court or mediations/arbitrations in order to come to a settlement.

Products liability disputes

  • Assess insurance implications across a range of cases involving everything from defective pharmaceutical products to food and beverage contaminations.


  • Broadly similar to the work of a general transactional lawyer. There are extra rules and regulations governing insurance transactions which lawyers need to take into account.

Professional indemnity/errors and omissions

  • Represent professionals accused of malpractice and their insurers. The professions most often affected include engineers, architects, surveyors, accountants, brokers, financial advisers and solicitors as well as doctors, dentists, surgeons, etc.
  • Investigate a claim, assess its authenticity and look into the coverage of a given insurance policy to determine an insurer's degree of liability.
  • Take advice from experts on professional conduct.
  • Draft letters in response to claims.
  • Prepare documents for court or out-of-court settlements.
  • Attend pretrial hearings, case management conferences and trials if a case goes to court.
  • Attend joint-settlement meetings, arbitrations or mediations in out-of-court cases.


Realities of the job

  • Insurance is a complex and technical area, and insurance policies are not the lightest reading material you'll ever come across.
  • Insurance lawyers are known for their precise and fastidious working style. Insurance policies are grounded heavily in contract law so excellent attention to detail and verbal reasoning skills are vital.
  • Insurance cuts across virtually every aspect of life and legal practice so insurance attorneys can find themselves working frequently with other departments and practice groups.
  • Lawyers may also find themselves working across or specializing in certain sectors including the energy, pharmaceutical, environmental and corporate sectors.
  • Good organizational skills are crucial, because lawyers are often dealing with a host of claims at various different stages. There are often daily deadlines and clients need to be kept constantly informed.
  • Lawyers have to pay special attention to potentially fraudulent claims or parts of claims.
  • Insurance cases range from huge international disputes to small local squabbles. Associates might run a small case themselves, but only work on a component of a large high-value dispute.
  • Many firms regularly act for both insurance companies and insured policyholders. There is a trend toward firms specializing in either policyholder or insurer work.


Current issues

June 2024 

  • Much like many other transactional practice areas, insurance lawyers will also be feeling the effects of the turbulent economic and geopolitical landscape caused by rising inflation and interest rates (which are looking to plateau in the coming year), the ongoing war in Ukraine, and rising tensions between US & China. S&P global have reported there is an estimated $35 billion dollars worth of specialty insurance claims from the war in Ukraine. The European country is looking to find ways to cover both US and non-US insurers’ exposure when investing in the region.

  • The increasing frequency of natural disasters caused by climate change also poses a potentially enormous challenge for insurers, both now and in the future as they often lead to huge losses. For example, after the devastating hurricane Ian hit Florida and South Carolina in 2022, it has been reported the insurance industry faced a loss of around $50-65 billion dollars in claims. This is the second-largest loss after Hurricane Katrina in 2005.
  • In addition, with the increasing risks from weather and related disasters, premium rates for insured homes are expected to increase slowly with 95% of full-risk premiums being charged to customers once we hit 2037.
  • Aviation insurers are continuing to face difficulty after refusing to pay out for claims that were made by aircraft leasing businesses that have planes stuck in Russia following sanctions imposed due to the war in Ukraine. Russian insurers have settled with leasing companies for over 100 aircraft, but western insurers are seemingly less inclined. The world’s largest aircraft leasing company, AerCap, has agreed to deals amounting to $1.3 billion covering 67 of its stranded 113 aircraft. More than 400 planes were valued at over $10 billion when they were stranded in Russia.
  • Other new technologies such as autonomous vehicles also present novel terrain for auto insurers. The global market for autonomous vehicles was valued at more than $50 billion in 2019, and is expected to reach just under $725 billion by 2026, but questions are still looming for insurers whether liability lies with the driver or manufacturer.

  • As artificial intelligence continues to grow into almost every industry, Colorado has made somewhat of a stand against it, being the first state to implement a regulation on insurers’ usage of AI. This is largely to prevent race-based discrimination which the state felt certain models and algorithms were susceptible to. On June 12024, all life insurers in the state must submit a compliance progress report and then an annual compliance attestation beginning on December 1 of the same year.

  • A notable case playing out is the ongoing insurance suit surrounding the opioid crisis. Most significantly, pharmaceutical company North Carolina Mutual Wholesale Drug Co. won its defense against insurer Chubb Ltd. A federal judged ruled the latter must pay the former its defense costs after the pharmaceutical company faced 115 lawsuits from local governments in relation to the company’s alleged overselling of opioids to local pharmacies and doctors. This will open up the door for similar suits from big pharma to follow.