Skip navigation

By Ian Wasser

 

Public Policy and the Means-End Test

In New York LIfe v. Dodge, the dissent argues that the regulation of insurance is an exercise of state police power.  In determining whether a state can regulate various aspects of a life insurance policy, a means-ends test is applied.  In this case, the subject matter is life insurance, which is regulated by contract.  The specific end or goal is for the state to protect the net value of insurance by regulating forfeiture provisions.  The means used by the state to accomplish this end are non-forfeiture laws, which serve to protect the value of life insurance policies.  In applying this test, the dissent concludes that a state can prevent foreign insurers from abusing the rights of their citizens.

The court in Griffin v. McCoach similarly agrees that a state has the police power to regulate life insurance contracts.  Specifically, the Griffin court held that there must be an insurable interest in all named beneficiaries to a life insurance policy.  In coming to this conclusion, the court suggests that public policy should dictate who can be a beneficiary to a life insurance policy.  Applying the means-ends test of the dissent in Dodge to the the case in Griffin yields a similar result.  The state interest is to prevent members of the public from having life insurance contracts placed upon their heads by strangers.  The means used by the state to accomplish this end are regulation of life insurance.

In reconciling the different holdings in Dodge and Griffin, it is important to consider the prevailing state interest.  In Griffin, the state interest was to prevent potential contracts for murder.  In Dodge, the state interest was to protect the value of life insurance policies against ill-advised contracts.  The Dodge court was also forced to balance the counter-interest in freedom of contract.  Clearly, the state interest in Griffin is far more compelling when compared to the state interest in Dodge.  Thus, Griffin stands in direct opposition to Dodge, simply by application of a means-end test for the regulation of certain aspects of life insurance by states.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: