Modern insurance is a financial product that was developed overseas rather than in the United States. Many insurance contract legal principals were also first developed by English Courts.

So, why do you buy an insurance policy? Sometimes, it is required by a mortgage or a loan. Often, you buy insurances because you view the risk of devastation by a catastrophe to be far worse than “hedging” against this situation by paying a small premium. I think most of us buy insurance for the peace of mind in knowing we will be able to recover should a catastrophe occur. In my own experience, I switched insurance companies because I was very unsatisfied with the approach taken by my previous insurance company in paying out a claim. At the end of the day, I don’t think that my current insurance company, Allied, would have paid more than my previous company, Phoenix Indemnity. The problem was that I had to fight Phoenix Indemnity for every penny paid whereas Allied feels like a partner that is working to help me, not hose me.

Emotional distress damages and consequential damages beyond the insurance policy are often granted to policyholders because the insurance industry contemplates the consequences of wrongfully performing its obligations. Every insurance adjuster knows that the purpose of buying the insurance is defeated if the underwriter wrongfully underpays a claim or fails to pay at all.

Peace of mind is one of the most basic attributes of an insurance product, even though it is never mentioned in the policy. Policyholders intuitively know that this peace of mind is a large part of the bargained-for-exchange. The emotional toll caused by an insurer’s unjust claim delay and denial is lost peace of mind.

Malcolm Clarke, a professor of Commercial Contract Law at Cambridge has written a worthy read for an insurance law book, Policies and Perceptions of Insurance Law in the Twenty-First Century (Oxford Univ. Press 2007). His explanations of insurance are very helpful to consumers of insurance.

Professor Clarke addressed the reason why consumers purchase insurance in the context of risk, risk aversion, stress aversion, and peace of mind:

“To ordinary policyholders, who may well not be models of behavior or rationality, something is risky if loss is relatively likely to happen, or, although it is not likely to happen, if the effect will be disastrous if it does….Policyholders are less concerned with the precise probability than with whether the risk seems probable or bad enough to justify paying (premium) to soften its effect; that depends on their view of things, i.e., what psychologists call risk aversion.

Risk Aversion

In the words of The Economist, risk aversion is the feature of human nature that explains why, ‘when given a choice between, say, losing 1 dollar and a 10 per cent chance of losing 10 dollars, most people would prefer a certain outcome (losing 1 dollar) to a risky one (losing 10 dollars or nothing)’. ‘Prospect theory tells us that people making decisions in uncertain conditions weigh prospective loss twice as heavily as prospective gains. If people know that there is a 1 per cent chance of total loss of their £100,000 house, they may be willing to pay more than £1,000 for insurance, and one of the main reasons is that they are willing to pay to offload anxiety. Such people are ‘risk averse’. The Association of British Insurers (ABI), the organization that speaks for the insurance industry, projects insurance as something that enables people who are insured to organize their household budgets, or plan their business activities, with greater certainty…This raises the question: What is it that makes a risk so unacceptable that people decide to do something about it and, in particular, to buy insurance cover?

Stress Aversion and the Purchase of Peace of Mind

Risk aversion grows from stress aversion. One of the causes of stress in human Beings–in the motor car, the work place, or anywhere else–is a sense of not being in control of their situation, or of themselves. For many of those who avoid flying, the reason is not only fear of an air crash but also fear of losing control of themselves, as a result of stress. Research also shows that, in a given risk situation on the roads, the anxiety levels among passengers are higher than among drivers. Drivers feel in control; passengers do not…

One of the ways in which people seek to regain control of their lives, to reduce stress and to move towards some kind of peace of mind, is by taking out insurance. That is why some insurers send their sales staff on courses to learn about the ‘emotional needs’ of the customer. That is also why some insurers advertise life insurance for ‘life-long peace of mind’ and travel cover ‘to give you peace of mind when travelling’ . A major bank has offered ‘a free home insurance review to ensure peace of mind’. Insurers also point to peace of mind when underlining that the cheapest insurance is not always the best insurance. Advertising of this kind has an enduring appeal, and even the courts have recognized this–in other countries.

Associated with the wish for peace and certainty is a desire for security. Sociologists tell us that on a descending scale of priorities, just after people’s basic needs for food, clothing, and shelter, comes the need for security. Insurers know this too, and security is another prominent feature of the image that insurers project of their products to the insured.

…An important feature of insurance contracts is that a significant part of what policyholders are paying for is peace of mind.”

I read an interesting article last week about Twitter from Time Magazine. It is still a little hard for me to see the significance of Twitter and what it can do for a business, but this piece from Time magazine did a good job in showing how Twitter can be influential in some very interesting ways.

Feel free to follow me on Twitter, though I am only somewhat active. As Twitter (and I) evolves, I may become much more active. Time will tell.

On Friday night, the wait was over for the finalists of the 2009 Ernst & Young Entrepreneur of the Year contest for Utah and southern Idaho. Awards were given in a total of eight categories. Over 1,200 people attended the black-tie event at the Salt Palace Convention Center.

Utah Lt. Gov. Gary Herbert, the keynote speaker, noted that small businesses fuel the state’s economy, with about 57,000 “small employers” representing 97 percent of the state’s employers.

Utah’s economy favors free markets, which is why a handful of national business publications have rated Utah’s economy as No. 1.

“I fear, at least in some ways, (the importance of free markets is) being forgotten in Washington, just a little bit,” Herbert said as the audience applauded in agreement. “Capitalism is becoming a dirty word. I’m here to tell you that’s not going to happen in Utah.”

New this year in the awards competition was a social-entrepreneur category, described as being for well-managed organizations that solve problems in the community with strong leadership. Matt Minkevitch of The Road Home received the award.

Minkevitch said The Road Home’s clientele are people who live in the margins and have one setback that ruins them financially. They end up homeless.

“One of the significant transitions that has taken place over the last eight years is we’ve focused on the other end of homelessness,” he said, “to help people move into housing.”

The Utah award recipients will next compete against other companies for national awards. Diversified Insruance Group was one of the sponsors of the awards.

Award recipients in the Utah competition were:

Technology: Matthew Heaton — BlueHost

Retail and Consumer Products: Jonathan Freedman, William Freedman and Charles Freedman ?— DownEast Outfitters

Emerging: David Flynn and Rick White — Fusion-io

Contract services: Douglas Sayer — Premier Technology Inc.

E-Commerce: Ryan DeLuca — Bodybuilding.com LLC

Social Entrepreneur: Matt Minkevitch — The Road Home

Services: Andrea Anaya — Career Step

Distribution and Manufacturing: Dallin Larsen — MonaVie

Diversified extends congratulations to all of the finalists and award recipients.

OK, so I didn’t make the list this year. Hmmmmmmmm. . .

However, I do want to share the list with you all because that’s what blogging is all about — right? Sharing information.

I recently found this list on Lexis-Nexis Law Center that has all of these great resources for researching current topics relating to insurance law. Take a look when you have some time because there is a lot of information there.

The Lexis-Nexis Top 50 Blogs for Insurance is the following (follow the link at the end to go directly to the original source):

These blogsites contain some of the best writing out there on coverage, catastrophic loss, regulatory compliance, life insurance, health care and insurance issues in general. They contain a wealth of information for the insurance community with timely news items, practical information, expert analysis, frequent postings and helpful links to other sites.

These blogsites also show us how insurance issues interact with politics and culture. Moreover, they demonstrate how bloggers can impact the world of insurance law and insurance industry issues.

The 2008 Honorees are, in alphabetical order, as follows:

Blog-re.com – Brought to you by the publisher of reinsurance and fac magazine, this is the reinsurance industry’s first dedicated blog, this site provides opinions and thoughts on the issues driving the reinsurance industry. Published by Mark Geoghegan.

Boston ERISA and Insurance Litigation Blog – This blog covers ERISA, insurance coverage, and insurance bad faith. Published by Stephen Rosenberg of the McCormack Firm, LLC. 

California Insurance Lawyer Blog – This blog focuses on California insurance disputes and addresses ERISA, health insurance, insurance bad faith, life insurance, long-term care insurance and long-term disability (LTD) insurance. Published by Kantor & Kantor LLP.

Cal Insurance Regulation – This blog updates and comments on legal and regulatory issues affecting California insurance companies. Published by Steven H. Weinstein, Richard G. De La Mora, and Spencer Y. Kook of Barger & Wolen LLP.

Canadian Insurance Law Blog – This blog addresses issues related to insurance litigation, property damage, personal liability, commercial liability and insurance law affecting Canadian insurance companies in British Columbia and Vancouver. Published by Mike Thomas of Harper Grey LLP.

Cavanagh Williams Update – Provides insurance and litigation notes for LexMonitor, a daily review of law blogs and journals. Published by Cavanagh Williams.

Coverage Counsel – A rolling dialogue of New York insurance coverage cases and issues. Published by Roy Mura of Mura & Storm PLLC.

Coverage News – Provides information about recent developments of interest to those in the insurance and reinsurance community. Published by Thomas M. Bower of the Law Offices of Thomas M. Bower.

Declarations and Exclusions – News and Comments on California Insurance Law, the politics of insurance and other risky business. Published by George Wallace.

Ernie the Attorney – Personal musings on law and politics. Published by Ernest Svenson of the Svenson Law Firm.

Gauntlett on Insurance – This blog updates and comments on global policyholder insurance recovery. Published by David A. Gauntlett.

Gunn Law Blog – Reflections of a Florida legal veteran on insurance issues with a special emphasis on hurricanes, insurance coverage and bad faith, and Tropical Storm Fay. Published by Lee Gunn of the Gunn Law Group.

Health Insurance Blog – One of the most informative internet blogs on health insurance, the site posts commentary on health insurance issues relating to California health insurance and California carriers. Published by Info@healthinsuranceblog.com.

InjuryBoard Regional Blogs – This blog provides the latest injury news from across the country. The site provides visitors with up-to-date safety and injury news, legal analysis by a nationwide network of attorney bloggers, and an encyclopedia of practical information about important life-issues surrounding accidents and injuries that also provides assistance in identifying and connecting with qualified legal counsel. Published by Injury Board.

Insurance Claims and Issues – Commentary from a published author, speaker and consultant on the subjects of insurance coverage and insurance bad faith. Published by Dennis J. Wall of Winter Springs, Florida.

Insurance Claims and Bad Faith Law Blog – More commentary from published author, speaker and consultant Dennis J. Wall on the subjects of insurance coverage and insurance bad faith. Published by Dennis J. Wall of Winter Springs, Florida.

Insurance Coverage Law Blog – Insightful, cutting edge and funny, this blog is the go-to source for all matters relating to insurance coverage analysis, with special emphasis on the fallout from Hurricane Katrina. Coverage attorney and prolific blogger David A. Rossmiller is nationally renowned for his work on anti-concurrent cause clauses and his commentary on the downfall of Richard “Dickie” Scruggs. Published by David A. Rossmiller of Dunn Carney Allen Higgins & Tongue LLP.

Insurance Coverage Law in Massachusetts – Features commentary and practice tips on Massachusetts general litigation and insurance coverage issues to assist claimants, insureds and insurers who have disputes over motor vehicle, homeowners, general liability and other insurance policies. Published by Massachusetts attorney Nina E.
Kallen.

Insurance Coverage Lawyer Blog – Features commentary and analysis of cutting edge insurance issues arising from current events. Published by Alan S. Rutkin of Rivkin Radler LLP.

Insurance Defense Blog – Focuses on civil litigation defense in the Washington, D.C. metropolitan area. Published by Dave Stratton of Jordan Coyne & Savits LLP.

Insurance Law Hawaii – A commentary on insurance coverage issues in Hawaii. Published by Robert D. Harris and Tred R. Eyerly of Damon Key Leong Kupchak Hastert.

Insurance Law Notes – Provides insight and analysis of Pennsylvania insurance coverage law, cases and comments. Published by Richard T. Victoria of Meyer, Unkovic & Scott.

Insurance Scrawl – Commentary on the law of insurance, the insurance of business and the business of insurance. Published by Marc Mayerson.

InsureBlog – Commentary from industry professionals on insurance issues, principles and solutions. Published by William Halper, CLU, H.G. Stern, LUTCF, CBC, Bob Vineyard, CLU and Mike Feehan.

InsureReinsure – An insurance and reinsurance blog that provides insight and analysis on a wide range of topics, including arbitration, climate change, D&O liability, excess and surplus lines, insolvency, restructuring and run-off, Katrina and other catastrophes, life insurance and annuities, Lloyd’s, regulatory compliance, subprime/credit crisis, terrorism risk and insurance, and industry developments from various states and Latin America. Published by Brian Green, Carol-Ann Burton, Helen Clark and Jeanne Kohler of Edwards Angell Palmer & Dodge.

Law and Insurance – This blog keeps an eye on what’s developing in insurance law and practice. Published by David S. White of Thompson & Knight LLP.

Life Insurance Blog – Offers ideas, tips and news about life insurance and uses of life insurance. Published by Richard Reich.

Life Insurance Compliance & Regulation Law Blog – Provides updates and discussion on life insurance compliance, annuity compliance and insurance regulation. Published by former New York regulator Cailie A. Currin of The Currin Law Office.

Louisiana Law Blog – Insight and information on Louisiana law, litigation and legal culture brought to you by lawyers serving the legal needs of Louisiana businesses and Fortune 500 companies, with a special insider’s emphasis on catastrophic loss associated with hurricanes. Published by Alan J. Berteau of Kean Miller Hawthorne D’Armound McCowan & Jarman LL.

Managed Care Contracting & Provider Payment – Features commentary for health care providers, practitioners, insurers and managed care companies to address issus that arise in the relationship between them. Published by Robin Fisk and the Fisk Law Office.

Managed Care Matters – A weblog on managed care for group health, workers’ compensation and auto insurance, covering health care cost containment, health policy, health research, and medical news for insurers, employers, and healthcare providers. Published by Joseph Paduda of Health Strategy Associates.

Mark Nation’s Florida Insurance Law Blog – Provides insight into Florida insurance law and litigation. Published by Mark Nation.

Merlin Law Group Blog – Features insights from a policyholders’ perspective on insurance disputes, insurance claim litigation and insurance bad faith. Published by William “Chip” Merlin of the Merlin Law Group.

Mississippi Law Blog – Features Mississippi litigation news, thought-provoking case analysis and commentary about Fifth Circuit opinions. Published by Bradley Arant Rose & White LLP.

MRB Insurance Law Blog – Focuses on insurance matters relevant to the areas of property and casualty, insurance coverage and subrogation and provides timely and useful updates on these matters for insurance professionals, adjusters, in-house lawyers, risk managers and business. Published by Raj. K. Datt of MacMillan Rooke Boeckle LLP.
National Insurance Law Forum – Provides a public service intended to facilitate discussion and an exchange of ideas and information among insurance industry professionals, risk managers, attorneys, policyholders, students and other with an interest in the development of American insurance law. Members of the Forum are attorneys who concentrate their practice in insurance and bad faith law and litigation. Published by Kevin T. Merriman [counsel to Ward Norris Heller & Reidy], Sara M. Thorpe [manging partner of Gordon & Rees’ San Francisco office], Michael F. Aylward [senior partner in the Boston office of Morrison and Mahoney LLP], Diane L. Polscer [managing partner of the Portland office of Gordon & Polscer, LLC] and Christopher W. Martin [founding partner of Martin, Disiere, Jefferson & Wisdom LLP], the attorneys of the National Insurance Law Forum.

New York Civil Law – Provides a forum for New York appellate law, civil procedure, insurance coverage and defense and other interesting issues. Published by Matthew S. Lerner of Goldberg Segalla.

No-Fault Paradise – A site devoted to New York no fault-news, New York no-fault decisions, New York no-fault resources and some Florida no-fault too. Published by David M. Gottlieb of Baker Sanders Barshay Grossman Fass Muhlstock & Neuwirth.

OverReg’d – Provides insights on arbitration, securities fraud, unsuitable trading, unauthorized trading, excessive markups, churning, conversion, market manipulation, ERISA violations, RICO and NASD. Published by Terrence J. Fleming, Jonathan M. Harris, Kim Ruckdaschel-Haley, Sandra S. Smalley-Fleming, David Flower, Nicole M. Siemens, Christopher A. Grgurich, Mark S. Enslin and Amy Rae Mason of Lindquist & Vennum.

Point of Law Insurance Section – This blog provides information and opinion on the U.S. litigation system. Published by Walter Olson of the Manhattan Institute Center for Legal Policy.

ProSchool Insurance Blog – Provides comprehensive industry news and analysis, and a moderated forum for insurance students and their questions. Published by Gary Sternberg, Director of Insurance Education for ProSchools.
Real Lawyers Have Blogs – Provides insight and analysis on the topic of the law, firm marketing, blogs, Web 2.0 and baseball. Published by Kevin O’Keefe.

Reinsurance Law Blog – Features analysis and commentary related to insurance, reinsurance, insurance coverage issues, complex personal injury cases, including class actions, first and third party claims, bad faith claims, products liability claims and commercial litigation. Published by Jody Nathan of Stauffer, Graves & Nathan.

Reinsurance Focus – Provides new reinsurance-related and arbitration developments, with a unique focus on financial services, high stakes litigation, financial regulation and product counseling. Published by Roland Goss, Lynn Hawkins and Brian Perryman of Jorden Burt LLP.

ReRisk – Features provocative insight on risk, re-/insurance and future thinking with a particular bent toward complex commercial issues, large reinsurance disputes, professional indemnity claims and general liability issues. Published by Jolyon Patton of Halliwells.

RiskProf – Provides a forum for discussions on insurance, liability law and economics, plus occasional other subjects. Published by Martin F. Grace and J. Tyler Leverty of the University of Iowa.

Specialty Insurance Blog – Features news and commentary on specialty insurance, risk management and private equity, with an emphasis on professional liability and entrepreneurship. Published by Bob Sargent of Tennant Risk Services.

The Alan Katz Health Care Reform Blog – Provides insight about reform from one agent’s perspective, with a particular emphasis on California healthcare reform. Published by Alan Katz.

The D&O Diary – Provides a periodic journal containing items of interest from the world of directors & officers liability, with occasional commentary. Published by Kevin M. LaCroix, an attorney and partner in Oakbridge Insurance Services.
Terms & Conditions – An insurance industry blog that aims to provide timely information and discussion on contemporary insurance topics. Categories include climate change, catastrophes, emerging risks, industry financials, flood insurance, technology, market conditions, alternative risk transfer and regulation. Published by Claire Wilkinson, vice president for Global Issues at the Insurance Information Institute.

Terra Extraneus – Provides a discussion of law and the practice of law and offers opinions about the strange legal world in which we live and work. Published by Rod Heggy, an attorney and Terry Hull, a writer and paralegal.

Urban Law Journal – Provides a forum to facilitate discussions on the nexus between the law and urban affairs. Published by recent Seton Hall Law School graduate David Simunovich.

Go here to find the original list.