Insurers' Agreements Not to Enforce Strict Legal Rights: Bargaining with Government and in the Shadow of the Law

This article is concerned with insurers making agreements not to enforce their legal rights and thereby reducing in importance certain areas of the law of insurance. These agreements are of two kinds: the first is made between insurers themselves, usually with the object of avoiding the uncertainties of legal rules and the expense of obtaining court judgments; the second kind are undertakings given by insurers to government often so as to forestall official criticism and discourage legislation which might otherwise openly regulate their industry. Both types of agreement have received only very limited attention from writers on insurance law.The article illustrates that the operation of the legal process may not be fully revealed by study only of those public and visible rules which govern the rights between insurers, government and the public. Private agreements. which may not even amount to legally enforceable contracts, are one of the less visible factors that can transform the surface appearance of the legal system.