Filed Under:Agent Broker, Coverage Issues

Attorney: Supreme Court Is Helping Insurance Industry

"The insurance industry was never intended to be—nor should it become—the income redistribution system of the United States,” says Cozen.

NU Online News Service, June 16, 12:41 p.m. EST

NEW ORLEANS - In his opening keynote address at the ACE America’s Claims Event conference, attorney Stephen A. Cozen said the Supreme Court has become a valued partner of the insurance industry, working to reduce punitive damage awards and reject exposure lawsuits.

“The Supreme Court has been quietly helping the insurance industry in important ways over the last few years,” says Cozen, founder and chairman of Cozen O’Conner, during his address Wednesday afternoon. “In particular, the Court has been discouraging exorbitant punitive damage awards and now appears poised to reject the species of climate change litigation that could have imposed ruinous liability on every business in the country.”

In terms of punitive damages, Cozen said that the Supreme Court is requiring jury verdicts not be given primacy, but instead that the courts look at factors such as comparable fines and penalties for comparable conduct while taking into account factors such as degree of reprehensibility.

“The result has meant that punitive damage awards have been going down and will continue going down,” says Cozen. “The Supreme Court will, in my opinion, ultimately conclude that if the ratio between compensable damages and punitive damages is not in the single digit category—1:1, 2:1, 3:1—depending on the nature of reprehensibility, it will declare that particular result unconstitutional as a denial of due process.”

Cozen also made his opinions known about the case American Electric Power v. Connecticut, which was recently presented to the Court.

“American Electric Power v. Connecticut is the case where states sued for emissions that added to global warming, seeking to use a nuisance law theory to convince a court to take what was essentially political action,” says Cozen. “The court has heard arguments in this case, and in my view will be rejecting the ultimate liability under that nuisance law theory.”

Lastly, Cozen said the having certainty in the law is critical for insurance companies to continue to exist.

“Certainty in the law means that we know when we write a policy it covers what is intended, and we know the courts will impose the limitations of our language the way that we intended them to be imposed,” he says. “That has happened more and more in the past, and I think will happen more and more in the future. The certainty of the law is the safety of us all.

“I hold to one philosophy, and that is the insurance industry was never intended to be—nor should it become—the income redistribution system of the United States.”

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