Tort Reform and Insurance Markets

Viscusi, W. Kip

doi:10.2139/ssrn.469904

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Tort Reform and Insurance Markets

30 Pages Posted: 17 Nov 2003

See all articles by W. Kip Viscusi

W. Kip Viscusi

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

Date Written: October 2003

Abstract

Proposed tort reforms have focused on punitive damages and noneconomic damages, each of which pose problems for jury decision making. The U.S. Supreme Court decision in State Farm v. Campbell will greatly limit very large punitive damages awards, and will affect smaller punitive awards to a lesser degree. Noneconomic damages caps enacted by state legislatures have greatly enhanced insurance market performance. Insurers operate within the context of a highly imperfect, regulated market in which there is substantial price rigidity induced by regulation. Reform efforts should strive to establish greater predictability and stability in these awards components rather than simply being concerned with imposing specific numerical caps.

Keywords: tort reform, insurance, punitive damages, pain and suffering

JEL Classification: K13, G22

Suggested Citation: Suggested Citation

Viscusi, W. Kip, Tort Reform and Insurance Markets (October 2003). Available at SSRN: https://ssrn.com/abstract=469904 or http://dx.doi.org/10.2139/ssrn.469904