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The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses

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  • Patricia Born
  • W. Kip Viscusi
  • Tom Baker

Abstract

Whereas the literature evaluating the effect of tort reforms has focused on reported incurred losses, this paper examines the long run effects using a comprehensive sample by state of individual firms writing medical malpractice insurance from 1984-2003. The long run effects of reforms are greater than insurers' expected effects, as five year developed losses and ten year developed losses are below the initially reported incurred losses for those years following reform measures. The quantile regressions show the greatest effects of joint and several liability limits, noneconomic damages caps, and punitive damages reforms for the firms that are at the high end of the loss distribution. These quantile regression results show stronger, more concentrated effects of the reforms than do the OLS and fixed effects estimates for the entire sample.

Suggested Citation

  • Patricia Born & W. Kip Viscusi & Tom Baker, 2006. "The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses," NBER Working Papers 12086, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12086
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    References listed on IDEAS

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    Cited by:

    1. Hao Yu & Olesya Baker, 2022. "Do noneconomic damage caps reduce medical malpractice insurance premiums? Evidence from North Carolina," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(2), pages 201-218, June.
    2. Christopher Carpenter & Sebastian Tello-Trillo, 2015. "Do 'Cheeseburger Bills' Work? Effects of Tort Reform for Fast Food," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    3. Nick Hanley & Bengt Kriström & Jason F. Shogren, 2009. "Coherent Arbitrariness: On Value Uncertainty for Environmental Goods," Land Economics, University of Wisconsin Press, vol. 85(1), pages 41-50.
    4. Gomez, Fernando & Penalva, Jose, 2015. "Tort reform and the theory of coordinating tort and insurance," International Review of Law and Economics, Elsevier, vol. 43(C), pages 83-97.
    5. Muhammed Altuntas & James Garven & Jannes Rauch, 2018. "On the Corporate Demand for Insurance: Evidence From the Global Reinsurance Market," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 21(2), pages 211-242, September.
    6. Benjamin Ho & Elaine Liu, 2011. "Does sorry work? The impact of apology laws on medical malpractice," Journal of Risk and Uncertainty, Springer, vol. 43(2), pages 141-167, October.
    7. Thomas J. Miceli & Michael P. Stone, 2013. "The Determinants Of State-Level Caps On Punitive Damages: Theory And Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 31(1), pages 110-125, January.
    8. Altuntas, Muhammed & Berry-Stölzle, Thomas R. & Wende, Sabine, 2015. "Does one size fit all? Determinants of insurer capital structure around the globe," Journal of Banking & Finance, Elsevier, vol. 61(C), pages 251-271.
    9. Daniel Carvell & Janet Currie & W. Bentley MacLeod, 2012. "Accidental death and the rule of joint and several liability," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 51-77, March.
    10. Malani, Anup & Reif, Julian, 2015. "Interpreting pre-trends as anticipation: Impact on estimated treatment effects from tort reform," Journal of Public Economics, Elsevier, vol. 124(C), pages 1-17.
    11. Jingshu Luo & Hua Chen & Martin Grace, 2022. "Medicaid expansion, tort reforms, and medical liability costs," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(3), pages 789-821, September.
    12. Paola Bertoli & Veronica Grembi, 2018. "Courts, scheduled damages, and medical malpractice insurance," Empirical Economics, Springer, vol. 55(2), pages 831-854, September.
    13. Patricia Born & Faith Roberts Neale, 2014. "The Differential Effects of Noneconomic Damage Cap Levels on Medical Malpractice Insurers," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 17(2), pages 163-181, September.

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    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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