The Analysis of the Effect of the Tort Reform Legislation on Expected Liability Insurance Losses

This paper presents a framework for possible methodologies to evaluate the effect of tort reform legislation on expected liability insurance losses and loss adjustment expense. An analysis of the most common types of reforms and the difficulties that may be encountered when evaluating their effects is presented. The direct (non-behavioral) effect on General Liability losses of a hypothetical reform which caps punitive damages and non-economic compensatory losses and which eliminates joint and several liability is analyzed using methodologies developed at ISO.