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

36 Pages Posted: 27 Dec 2008 Last revised: 16 Oct 2009

Patricia Born

Florida State University - College of Business; Florida State University - College of Law; California State University, Northridge - Department of Finance, Real Estate, & Insurance

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Tom Baker

University of Pennsylvania Law School

Multiple version iconThere are 4 versions of this paper

Abstract

Whereas the literature evaluating the effect of tort reforms has focused on insurers' reported incurred losses, this paper examines the long run effects of reforms using the developed losses from a comprehensive sample of insurers 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 that reforms have the greatest effects for the firms that are at the high end of the loss distribution. The beneficial effects of reforms on developed losses are more pronounced than those obtained from initially-reported losses, suggesting that insurers underestimated the true effects of the reforms.

Keywords: tort reform, medical malpractice, insurance, insurance losses, insurers' losses

JEL Classification: I10, K13, G22

Suggested Citation

Born, Patricia and Viscusi, W. Kip and Baker, Tom, The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses. Journal of Risk and Insurance, 2009; Vanderbilt Law and Economics Research Paper No. 08-30; FSU College of Law, Law, Business & Economics Paper No. 09-26. Available at SSRN: https://ssrn.com/abstract=1319375

Patricia H. Born

Florida State University - College of Business ( email )

250 Rovetta Business Building
Tallahassee, FL 32306-1110
United States

Florida State University - College of Law

425 W. Jefferson Street
Tallahassee, FL 32306
United States

California State University, Northridge - Department of Finance, Real Estate, & Insurance ( email )

Northridge, CA 91330-8379
United States

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

Tom Baker

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-2185 (Phone)

HOME PAGE: http://www.law.upenn.edu/cf/faculty/thbaker/

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