The Economics of Liability Insurance
This chapter examines key elements of the liability system in the USA: the basic theory on the role of liability rules in providing incentives for loss control; the effects of limited liability on the demand for liability insurance and on the ability of tort liability to provide optimal incentives; the problem of correlated risk in liability insurance markets; issues in liability insurance contract design; and the efficiency of the US tort liability and liability insurance system. The troublesome areas of medical malpractice, directors’ and officers’ liability and general liability insurance crises are highlighted.
Ambrose, Jan; Carroll, Anne; and Regan, Laureen, "The Economics of Liability Insurance" (2013). Department of Finance. 26.