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The Business Of Insurance Is Subject To The Law Of Unintended  Consequences As If It Were On Steroids  

The law of unintended consequences is not statutory. No state or federal  government has enacted it into law. No executive has signed the law. It  is, rather, a law of the nature of people. It is an adage or idiomatic  warning that an intervention in a complex system always creates  unanticipated and often undesirable outcomes.  General observation requires the hypothesis that actions of people,  especially of governments, will always have effects that are  unanticipated or unintended, has been proved. Economists and other  social scientists have heeded its power for centuries. Regardless, for  just as long, politicians, insurers and popular opinion have largely  ignored the law of unintended consequences to their detriment.  

There is no common-law duty for a court, especially in a heavily  regulated sector of the economy like insurance to create new rules.  Every court should be loathe to invent duties unmoored to any existing  precedent. The law of unintended consequences counsels against it.  A good illustration of the law of unintended consequences can be  To find a good illustration of the law of unintended consequences, one  need look no further than the Supreme Court\'s decision in Williamson  County Regional Planning Comm\'n v. Hamilton Bank of Johnson City, 473  U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). 

The Court\'s actual  holding was pedestrian: that Hamilton Bank\'s takings claim was unripe  because the bank had not exhausted its administrative remedies,  specifically its right to ask the County for a variance to develop the  property in the manner proposed. In dictum, however\\u2014dictum in the sense  that the Court\'s pronouncement was at that point unnecessary to its  decision\\u2014the Court went on to say that the bank\'s claim was "not yet  ripe" for a "second reason. That reason too was couched in terms of  exhaustion: that under state law "a property owner may bring an inverse  condemnation action to obtain just compensation for an alleged taking of  property"; and that, until the bank "has utilized that procedure, its  takings claim is premature." The Court\'s implicit assurance, of course,  was that once a plaintiff checks these boxes, it can bring its takings  claim back to federal court.