Ending Judicial Usurpation of Insurance Regulatory Authority: The Problem of Class Action Litigation Involving Jurisdiction of State Insurance Departments

In a growing number of class action lawsuits against insurers, plaintiff attorneys seek not only to win large monetary awards, but also to regulate insurers' behavior in the marketplace and manage their relations with consumers. Such regulatory class actions threaten basic principles of republican democracy. Experience shows that modern class action litigation is a deeply flawed mechanism for resolving disputes between private parties. The overall effect of judicial usurpations of insurance regulatory authority is to subvert and destabilize the regulation of insurance, thus adding to the cost and decreasing the availability of insurance products. States can remedy this problem by enacting legislation that would require trial courts to refrain from certifying a proposed class action if the claims at issue are within the jurisdiction of a state administrative agency, such as an insurance department.