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Liability Rule Failures? Evidence from German Court Decisions

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  • Annika Pape

    () (Leuphana University Lueneburg, Germany)

Abstract

Since 2007, all insurance intermediaries face negligence liability that is supposed to reallocate risks and set economic incentives. Nonetheless, further measures are taken to improve consumer protection. So, the question arises does the liability rule influence the agents behavior, or not, and does it influence in the intended way, or not? Do court cases provide evidence for failure of the current liability rule? Based upon an economic analysis of liability rules, aspects concerning potential failures can be derived. An analysis of twelve verdicts suggests that understatement of intermediary responsibility as well as a potential overstatement of the consumer responsibility yields suboptimal results. Often, missing documentation reinforces that tendency.

Suggested Citation

  • Annika Pape, 2014. "Liability Rule Failures? Evidence from German Court Decisions," Working Paper Series in Economics 300, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:300
    as

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    File URL: https://www.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ifvwl/WorkingPapers/lue/pdf/wp_300_Upload.pdf
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    References listed on IDEAS

    as
    1. Uwe Focht & Andreas Richter & Jörg Schiller, 2013. "Intermediation and (Mis-)Matching in Insurance Markets—Who Should Pay the Insurance Broker?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(2), pages 329-350, June.
    2. Focht, Uwe & Richter, Andreas & Schiller, Jörg, 2009. "Intermediation and matching in insurance markets," FZID Discussion Papers 04-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Insurance; Intermediaries; Liability; Consumer Protection; Court Errors; Court Cases;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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