Insurance groups take issue with American Law Institute’s “restatements”

The National Council of Insurance Legislators (NCOIL) has expressed concerns to the American Law Institute (ALI) over its Restatement of the Law, Liability Insurance documents.

ALI, a group of lawyers and legal scholars, provides judges and lawyers with “restatements,” which are written documents that “aim at clear formulations of common law… as it presently stands or might appropriately be stated by a court.”

These restatements have been considered authoritative summaries and are regularly cited by judges as such. However, in recent years, ALI has been drafting restatements that are not clear or reflective of the law, said NCOIL. Rather, the restatements have been more aspirational — stating where the authors think it ought to go, NCOIL said.

Both the American Insurance Association (AIA) and the Property Casualty Insurers Association of America (PCI) came out in support of NCOIL’s stance.

“We are pleased that NCOIL has continued to voice strong concern regarding ALI’s proposed Restatement of the Law, Liability Insurance,” PCI and AIA said in a joint statement. “The restatement’s departure from current case law on liability insurance and the consequent failure to show proper deference to state legislative jurisdiction and expertise is troubling. AIA and PCI share the concerns outlined by NCOIL, as well as its suggested actions to bring the Restatement back into line with current law and the long-standing principles of the ALI.”

Restatements should not be recognized by courts as an authoritative reference on rules of insurance law, they added.

“We look forward to working with ALI on addressing the sections of the restatement that stray from sound, fundamental insurance contract law and may have adverse consequences for policyholders and the insurance marketplace,” PCI and AIA officials said.