Insurance appraisal & arbitration
| Autor | Lina M. Colón Santiago |
| Páginas | 65-77 |
INSURANCE APPRAISAL & ARBITRATION
LINA M. COLÓN SANTIAGO
I. Introduction .............................................................................................................................................. 65
II. Appraisal in the Insurance Business ................................................................................................... 66
III. Appraisal as Arbitration ......................................................................................................................... 68
A. Presumption in Favor of Arbitration .............................................................................................. 69
IV. Conclusion ................................................................................................................................................. 72
V. Appendix 1: Timeline ............................................................................................................................... 73
VI. Appendix 2: States .................................................................................................................................... 74
I. INTRODUCTION
Arbitration was established as a national policy by the Federal Arbitration Act as an
alternative process for dispute resolution generally used to settle problems related to
commercial contracts. Efforts toward this public policy have yielded success incrementing the
use of arbitration, as well as trust and reliance in the process it provides. However, when it
comes to the use of arbitration in the insurance industry certain concerns have developed
regarding consumer protection. For instance, several state legislatures currently have opted to
prohibit the use of arbitration when disputes related to insurance policies arise.
The insurance business was classified by the U.S. Supreme Court as an interstate
commerce under the Commerce Clause of Article I, Section 8 of the U.S. Constitution, in which
Congress responded by enacting the McCarran Ferguson Act, granting the states the authority
to regulate the insurance business. Prior to the ratification of this Act1 and following the ruling
of the Supreme Court, defining the insurance business as commerce,2 any agreement to arbitrate
a dispute over an insurance policy would have been enforced as valid and irrevocable, “save upon
such grounds as exist at law or in equity for the revocation of any contract.”3 With the
McCarran-Ferguson Act, states’ insurance regulation would “reverse preempt” federal statutes
of general application. Consequently, states have the power to — and enacted — numerous
anti-arbitration laws and regulations for the insurance industry, clearly contravening the
Federal Arbitration Act, a statute of general applicability, which did not expressly include the
insurance industry.
Some states have gone even further, by prohibiting in some property insurance policies
the appraisal clauses. This clause provides an alternate dispute resolution designed to solve
disputes that deal exclusively with post-loss disagreement on the value of either the property or
amount lost payable to the insured.4 Under this process, a panel of two appraisers and one
umpire evaluates the damages sustained by the insured property to determine the value of the
1 The National Society of Insurance Commissioners “proposed a bill that was introduced with revisions by Senators
Pat McCarran (D-Nev.) and Warren Ferguson (R-Mich.), and signed into law by President Franklin Roosevelt on
March 9, 1945.”
See
TOM BAKER & KYLE D. LOGUE, INSURANCE LAW AND POLICY: CASES AND MATERIALS (2013);
see
also,
McCarran-Ferguson Act, 15 U.S.C. §§ 1011–1015 (1945).
2 U.S. v. South-Eastern Underwriters Assoc., 322 U.S. 533 (1944).
3 Federal Arbitration Act section 2, 9 U.S.C. §2 (1947).
4 Anne D. Ogden,
Appraisal Clauses in Homeowners Insurance Policies: An Overview
, 27 TRIAL ADVOC. Q. 24
(2008).
Para continuar leyendo
Solicita tu prueba