Medical Malpractice Insurance in the Wake of Liability Reform

Abstract

This article examines the effect of the liability reforms on medical malpractice insurance over the 1984-91 period. This is the first study to use data by firm and by state for every firm writing medical malpractice insurance over that time period. The liability reforms increased insurance profitability (that is, decreased the loss ratios), where the main mechanism of influence was through decreasing losses. The quantile regression estimates imply that the greatest effects of liability reform are on the most unprofitable firms and that the effect is not uniform across the entire market. This pattern is consistent with the other principal finding, which is that damages caps appear to be most influential.

The Distribution of the Insurance Market Effects of Tort Liability Reforms

“…This study extends our previous work reported in Viscusi and Born (1995) in which we focus primarily on the case studies of the medical malpractice reforms in Michigan and…”

“…Our past analysis of the 1970s reforms in Viscusi and Born (1995) indicated that there was no long-term influence of these reform efforts on the current performance of the liability system.…”

Regulation of medical professions

“…Again, they found that malpractice reforms had an inconsistent impact on malpractice insurance premiums. The only reforms which significantly lowered premiums were those which limited the size of awards or those which limited the statute of limitations (Viscusi and Born, 1995, had similar findings with respect to malpractice premiums). None of the malpractice reforms were found to decrease frequency.…”

“…In contrast to Danzon, Sloan (1985) estimated the impact that various factors, including malpractice reforms, had upon malpractice insurance premiums (see also Viscusi and Born, 1995). Malpractice insurance premiums reflect, albeit imperfectly, increased malpractice frequency and severity through increased average benefits paid by insurers.…”

Do damages caps reduce medical malpractice insurance premiums? A systematic review of estimates and the methods used to produce them

“…14 Sloan, 1985;Danzon et al, 2004;Viscusi and Born, 1995;Viscusi and Born, 2005: no longer have records.…”