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.