Whie th doctrine may have widespread support from insurance law commentators, "Only a handful of state courts follow the rule, and the case law endorsing it is confused and inconsistent. Moreover, contract law scholars have largely debunked the contracts-of-adhesion argument on which the reasonable expectations doctrine was originally justified. They have established that neither consumer assent nor government regulation is necessary to lead firms to design efficient standard forms when market forces work sufficiently well" (Schwarcz para. 5). Because the doctrine has a record of stunted evolution in the courts and because there has been an academic undermining of its core rationale, many view it to be both antiquated and largely irrelevant. Still, the reasonable expectations doctrine has served as the primary theoretical and doctrinal construct for the judicial regulation of insurance over the past forty years, so the demise of the reasonable expectations doctrine has corresponded with the demise of judicial intervention in the content of insurance policies, a move which satisfies only insurance companies.
Schwarcz thus proposes that limited judicial regulation might be in the best interests of insurance consumers and that using product liability as the underlying doctrine may produce better results. Products liability law first clarifies the normative case for why courts should occasionally deviate from insurance policy terms, and it also provides a practical and theoretically sound doctrinal structure for implementing this principle. As Schwarcz notes, products liability law first suggests that informing consumers about product information is not as easy as the reasonable expectations doctrine supposes:
Because consumers can only digest a limited amount of information, requiring firms to perfect consumer information is not sensible. Instead, products liability law requires firms to inform consumers about particularly important safety risks and to provide instructions in an easy-to-read and obviously visible manner. (Schwarcz para. 7)
One major element in the development of insurance policy has been the campaign waged by the insurance industry to keep the courts from making insurance policy or for keeping judges adhering to pro-business policies.
The industry has spent millions on a massive public-relations campaign against "runaway jury awards" and "greedy trial lawyers" as a way of pressuring states to restrict citizens' rights to sue:
In California, insurance companies spent more than $44 million in 2000 to overturn two-year-old state laws that allowed a person injured in an auto accident to sue the other (at-fault) driver's insurance company for refusing to settle or lowballing payment on a legitimate claim. Similar campaigns are under way in states like West Virginia,...
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