Injury litigation and liability insurance dynamics

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Science  02 Oct 1987:
Vol. 238, Issue 4823, pp. 31-36
DOI: 10.1126/science.3659901


Prices for some lines of liability insurance have increased sharply in recent years, even while the real amount of coverage provided has declined. What accounts for these changes? The large financial inertia inherent in the insurance business, forecasting errors repeated across the industry, and herd-like reactions among many insurers have made the market adjustments exceptionally abrupt. But the most likely underlying cause for the current crisis in liability insurance is the inexorable expansion in liability law.