Property-Liability Insurer Reserve Errors: A Theoretical and Empirical Analysis

Grace, Elizabeth

doi:10.2307/252923

Cited by 101 publications

(135 citation statements)

References 15 publications

Supporting

Mentioning

115

Contrasting

Unclassified

Order By: Relevance

“…Weak insurers have a tendency to underreserve to make their financial soundness appear brighter (see Petroni 1992). In addition, the amount of reported reserves may be affected by incomesmoothing objectives and tax concerns (see Gaver and Paterson 1999;Grace 1990). reporting exemplary damages because, as indicated, we assume such claims will most likely lead to claimants' opting out of an early offer. Information on the nature of injury is reported on the Texas long form and enables us to distinguish fatalities and serious nonfatal injuries (brain damage, spinal cord injury, and amputation) from other nonfatal injuries.…”

Section: Reserve Amounts and Awardsmentioning

confidence: 99%

An Empirical Assessment of Early Offer Reform for Medical Malpractice

Hersch¹,

O'Connell²,

Viscusi³

2007

The Journal of Legal Studies

View full text Add to dashboard Cite

The early offer reform proposal for medical malpractice provides an option for claimants to receive prompt payment of all their net economic Losses and reasonable attorney fees. Using a Large sample of closed individual medical malpractice claims from Texas supplemented by data from Florida, this article provides an empirical assessment of the consequences of the early offer reform. Noneconomic damages make up about two-thirds of paid claim amounts.The minimum payment amount for serious injuries will affect the magnitude of insurer savings and claimant compensation. Payments to claimants will be expedited by 2 years by the early offer reform, and Litigation costs will be reduced by an average of $100,000-$200,000 per claim.

show abstract

Section: Reserve Amounts and Awardsmentioning

confidence: 99%

An Empirical Assessment of Early Offer Reform for Medical Malpractice

Hersch¹,

O'Connell²,

Viscusi³

2007

The Journal of Legal Studies

View full text Add to dashboard Cite

show abstract

“…Within the insurance literature, managers have been shown to use discretionary loss reserve estimates in an effort to influence earnings reporting (Beaver et al (2003) and Grace (1990)). Grace (1990) shows that insurers use reserve estimation to smooth earnings in an effort to minimize their tax liability.…”

Section: Related Literaturementioning

confidence: 99%

“…Grace (1990) shows that insurers use reserve estimation to smooth earnings in an effort to minimize their tax liability. Beaver et al (2003) also find evidence of insurers using reserve estimation to minimize their tax liability and to manipulate their earnings reports.…”

Section: Related Literaturementioning

confidence: 99%

“…Rationale for such manipulation includes avoiding regulatory scrutiny (for insurers, Grace (1990) and Petroni (1992)), smoothing tax liabilities (Grace (1990), Petroni (1992), and Petroni and Shackelford (1999)), and even increasing the compensation of executives (Healy (1985), Holthausen et al (1995), and Eckles and Halek (2007)). Additionally, there exists a literature investigating the oversight capacity that corporate governance mechanisms have in the manipulation of earnings.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Insurer Reserve Error and Executive Compensation

Eckles

Halek

2006

SSRN Journal

View full text Add to dashboard Cite

“…The data come from the 5-year historical page of the NAIC Property and Casualty Database. 27 Petroni (1992); Weiss (1985); Grace (1990); Christensen et al (1999); Gaver and Paterson (1999); Cole and McCullough (2006). 28 Other studies also use ROE (return on equity) or ROC (return on capital) to measure profitability.…”

Section: Data and Variables Descriptionmentioning

confidence: 99%

Demutualization and Demand for Reinsurance

Wang

Chang

Lai³

et al. 2008

Geneva Pap Risk Insur Issues Pract

View full text Add to dashboard Cite

This study investigates whether U.S. property-liability insurers change their demand for reinsurance after demutualization. Our empirical results show that the overall demand for reinsurance of converting insurers is not statistically different after the conversion. Furthermore, we find that converting insurers decrease the demand for reinsurance from non-affiliated reinsurers, but increase the demand for reinsurance from affiliated reinsurers after the conversion. One possible explanation is that converting insurers may treat reinsurance to affiliated reinsurers as risk retention rather than risk transfer so that they can reduce reinsurance cost. Another interesting finding is that converting insurers increase demand for reinsurance from non-affiliated reinsurers before conversion.

show abstract

Property-Liability Insurer Reserve Errors: A Theoretical and Empirical Analysis

Cited by 101 publications

References 15 publications

An Empirical Assessment of Early Offer Reform for Medical Malpractice

An Empirical Assessment of Early Offer Reform for Medical Malpractice

Insurer Reserve Error and Executive Compensation

Demutualization and Demand for Reinsurance

Contact Info

Product

Resources

About