Cristina Tilley

It is a truth rarely acknowledged by tort theorists that personal injury lawyers in possession of good plaintiffs must also be in want of insured defendants. Tom Baker acknowledges that truth in What is Insurance for Tort Law?, and follows it to some bracing conclusions. Baker’s article is a welcome rejoinder to Kenneth Abraham and Catherine Sharkey’s recent call to treat insurance as a constitutive part of tort doctrine and practice.¹ Abraham and Sharkey embrace liability insurance as an economically “beneficial” aspect of tort practice that “spreads the risk of tort liability, []helps to promote safety, ensures compensation for some tort victims who would otherwise not be compensated, and enables planning and budgeting . . . by potential defendants.”² Not so fast, Baker warns. When an insurance eminence like Baker issues a warning, it’s a good idea to listen. Yes, he agrees, tort and insurance are in the symbiotic business of distributing compensation. But Baker argues that tort should aspire to non-economic goals like corrective justice, and then artfully demonstrates how yoking injury outcomes to insurance pricing mechanisms can hobble that goal.

Baker begins with a frank and comprehensive look at how liability insurance influences tort in action. Because insurance “provides the money that changes hands through tort claiming,” (P. 8) lawyers who earn contingency fees are reluctant to sue uninsured defendants and insured defendants typically cede control over litigation to insurers. And because the universe of tort cases is determined by the infrastructure of insurance, tort doctrine has developed in ways that reflect and amplify the interests of insurers. For example, insurers who manage large pools of litigation are positioned to cherry-pick cases as vehicles for friendly changes to procedural and doctrinal rules. (Pp. 12-15.) Further, by tracing verdicts back to centralized insurers rather than to decentralized defendants, lobbyists can depict plaintiff compensation as an “insurance crisis” that justifies anti-plaintiff legislative reforms like damage caps, the restriction of joint and several liability, and limits to the collateral source rule. (Pp. 17-18.) Most notably, plaintiffs lawyers fill their rosters with clients whose claims can “plead into” existing insurance. Consequently, they prioritize cases involving premises liability, bodily injury, and property damage and devalue cases involving pure emotional or economic loss. (P. 15.)

So insurance lurks in the offices and courtrooms where tort is practiced. Does that reality make tort more – or possibly less – likely to fulfill any of the theoretical objectives that scholars assign to it? If tort’s primary goal is compensation, Baker grants, insurance has helped achieve it by “supercharging the claims that can be made for tort law as a compensation system” in which an aggregation of tort claims spreads losses throughout a networked economy. (P. 19.)

But Baker points out some difficult corollaries that might follow the systemization of tort compensation. For one thing, it can tempt some judges to widgetize individuals as components of a “mechanized society,” thereby casting doubt on the legitimacy of compensation for intangible suffering. (P. 20.) For another, once compensation is centralized in systemic fashion, it can just as easily be reduced as enhanced through centralized means (see his observations about cherry-picking and tort reform). (Pp. 20-21.) If, in contrast, tort’s primary objective is deterrence, Baker concludes that the insurance infrastructure can both advance and undercut that goal. At least as a matter of theory, insurance companies maximize profit by paying fewer claims, and reduce payment obligations by incentivizing their insureds to adopt loss-prevention practices, thus producing deterrent effects. On the other hand, he observes that actors relieved of a personal obligation to pay judgments might grow indifferent to the costs of the injuries they impose, thus undercutting deterrent effects, though they might still remain sensitive to the disapproval of their community peers. He cautions against bold claims of insurance-driven deterrence, noting that “how any of this falls out in practice is an empirical question.” (P. 23.)

Baker treads familiar ground in evaluating the influence of insurance on compensation and deterrence. No surprise, as both goals stem from academic interest in the human relationship to money – whether as a proxy for well-being or as a driver of behavior. He then breaks exciting new ground by asking how insurance might advance or undercut tort goals that concern the human relationship to other humans. When it comes to tort’s corrective justice powers, Baker credits insurance for making possible the payment of an interpersonal debt the defendant is found to owe a plaintiff he has injured. (P. 25.) At the same time, he reminds us, when insurance is unavailable for select wrongs, or is inaccessible to select populations, it is making impossible the payment of otherwise valid interpersonal debts. (P. 25.)

The theoretical goal of retribution, too – imposition of consequences for morally culpable conduct – is fraught by the contours of liability insurance. Baker claims that tort facilitates retribution when a private plaintiff sues on behalf of the larger community. (P. 26.) So if the defendant is found to owe the community some performance of remorse, externalizing that obligation onto a corporate insurer runs counter to the retribution goal. This concern, Baker contends, explains why so many states outlaw insurance for punitive damages, intentional torts, and criminal fines. (P. 25.) But these rules may inhibit actual compensation – and metaphorical retribution – for plaintiffs injured by intentional or egregious conduct.

Baker’s ultimate quarrel, it seems, is with the justice theorists’ habit of treating insurance as “outside the considerations that should determine tort law doctrine.” (P. 36.) Glib refusals to consider the role of insurance, Baker reminds us, artificially sanitize justice accounts of tort. The truth is that insurance companies need not and do not make their products universally or affordably available to all of the putative defendants in the country. Some communities and members of some demographic groups simply cannot access insurance. (P. 37.) Relatedly, some wrongs are not insurable in today’s market. (P. 37.) Consequently plaintiffs whose well-being suffers in insurance-poor communities are denied corrective justice thanks to the needs of insurance balance sheets. Corrective justice theorists do not claim to be interested in state-driven distribution of resources, Baker grants. But when the resource is insurance, and its distribution channels corrective justice to some demographics and away from others, Baker seems impatient with justice theorists’ excessive abstraction.

That impatience culminates late in the article when Baker declares that his “project” is to deploy insurance in the service of corrective justice. On its own, this project will enrich tort theory. And happily, Baker hints his project may be even more ambitious. For example, he chooses to treat community retribution as theoretically adjacent to corrective justice (not a mainstream move in tort theory). By collapsing injured individuals and injured communities into the same basket, (Pp. 37-38) Baker invites the reader to discern corrective justice and social justice critiques of contemporary tort insurance in his work. Similarly, when he observes that the absence of insurance “within a community or a demographic group” means that victims of wronging within those groups struggle for justice, widely available scholarship documenting underinsurance among racial minority groups leaves little doubt exactly whose justice he considers to be most in jeopardy.³ As the efficiency-versus-correction debate in tort theory turns to the role of insurance, correctives could not hope for a more cogent or credible voice than Baker’s.

1. Kenneth S. Abraham & Catherine Sharkey, The Glaring Gap in Tort Theory, 133 Yale L.J. 2165 (2024).
2. Abraham & Sharkey, supra, at 2174.
3. See, e.g., Jennifer B. Wriggins, The Color of Property and Auto Insurance: Time for Change, 49 Fla. St. L. Rev. 203, 233-36 (2022).