Transparency through Insurance: Mandates Dominate Discretion
University of Pennsylvania Law School
April 11, 2008
U of Penn, Inst for Law & Econ Research Paper No. 09-20
This chapter describes how liability insurance has contributed to the transparency of the civil justice system. The chapter makes three main points. First, much of what we know about the empirics of the civil justice system comes from access to liability insurance data and personnel. Second, as long as access to liability insurance data and personnel depends on the discretion of liability insurance organizations, this knowledge will be incomplete and, most likely, biased in favor of the public policy agenda of the organizations providing discretionary access to the data. Third, although mandatory disclosure of liability insurance data would improve transparency, a reasonably complete understanding of the empirics of the civil justice system also requires mandatory disclosure of the payments and defense expenditures that are not covered by liability insurance.
The first part of this chapter describes existing approaches to transparency through liability insurance in the U.S. The second part analyzes the role of liability insurance in promoting transparency in several discrete civil justice arenas - auto, medical, and products liability - and, for comparison purposes, workers’ compensation. The concluding section addresses objectives to expanding mandatory claims reporting and links the discussion in this chapter to the literature on the relationship between liability and insurance more generally.
Number of Pages in PDF File: 23
Keywords: Liability insurance, civil justice system, empirical research, incomplete knowledge, bias, transparency, mandatory disclosure of liability insurance data, expansion of mandatory claims reporting
JEL Classification: G22, K39
Date posted: May 28, 2009