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

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.

Does sorry work? The impact of apology laws on medical malpractice

“…5 While there is no hard data to substantiate the following claim, it is anecdotally accepted that apology laws have been passed due to activist pressure rather than systemic changes in the litigation environment, which means that apology laws are unlikely to be correlated with other changes that affect litigation (e.g., tort reform). 6 Crucially, since studies such as Viscusi and Born (2005) and Born et al (2009) find significant effects of tort reforms-and non-economic damage awards in particular-affecting malpractice payments, we find that apology laws are not significantly correlated with other tort reforms, specifically non-economic caps, punitive caps, laws on full information disclosure, joint and several liabilities, and collateral source rules. 2 We would expect these reductions to lead to similar reductions in malpractice insurance premiums.…”

Availability of the seat belt defense: Implications for auto liability insurance

“…A variety of changes in the legal environment have worked their way toward affecting liability insurance claim costs. Tort reform measures, such as caps on noneconomic damages, are shown to reduce losses paid by medical malpractice insurers (e.g., Born et al, 2009, 2018; Grace & Leverty, 2013; Viscusi & Born, 2005) and curb the frequency of medical malpractice claims (Danzon, 1986; Paik et al, 2013). Similarly, the repeal of auto no‐fault laws is shown to reduce auto insurance expenditures (Heaton, 2017).…”

“…The Avraham database reports states with noneconomic damage caps for medical malpractice claims. Born (2017) identifies states with broader noneconomic damage caps. Our results are consistent with either source used.…”

Do noneconomic damage caps reduce medical malpractice insurance premiums? Evidence from North Carolina

“…We study dynamic effects in the postimplementation period because the literature has recognized that premiums do not necessarily respond immediately and, in fact, there is evidence that it may take years to observe a premium reduction (Born et al, 2009). Our approach documents the effects in each postadoption year, pinpointing the timing of the effect.…”