Courts,scheduled damages,and medical malpractice insurance

We study how the functioning of the judicial system affects the availability and affordability of medical liability insurance, as proxied by the number of insurers and the premiums paid. We use two unique datasets collected in Italy from 2000 to 2010. Using the first dataset—insurance contracts for hospitals—we estimate the average treatment effect of schedules on insurers and premiums paid, conditional on judicial efficiency and proxied by different measures. Our identification rests on the partial overlap between healthcare districts and judicial districts, meaning that the caseload of a court and malpractice events at the healthcare provider level are not perfectly correlated. On average, the adoption of schedules does not produce any significant effect on insurers or on premiums paid. However, adopting schedules has a robust and significant effect on the number of insurers, but only in inefficient courts. We further investigate these findings using a second dataset comprising 17,578 malpractice insurance claims. We find evidence of a composition effect among claims that is triggered by higher levels of judicial inefficiency: As a court’s inefficiency increases, the likelihood for a case to not be decided on the merits decreases and the levels of reserve and recovery per claim decrease.     

The relationship between the markets for health insurance and medical malpractice insurance

This article evaluates the interdependence of medical malpractice insurance markets and health insurance markets. Prior research has addressed the performance of these markets, individually, without specifically quantifying the extent to which they are linked. Increasing levels of health insurance losses could increase the scale of potential malpractice claims, boosting medical malpractice losses, or could embody an improvement in medical care quality, which will reduce malpractice losses. Our results for a state panel data set from 2002 to 2009 demonstrate that health insurance losses are negatively related to medical malpractice insurance losses. An additional dollar of health insurance losses is associated with a $0.01–$0.05 reduction in medical malpractice losses. These findings have potentially important implications for assessments of the net cost of health insurance policies.     

Lawyers and medical torts: medical malpractice litigation as a residual option

The relationship between the supply of lawyers and the frequency of medical malpractice claims for one state is examined. A model of the location decisions of lawyers within a state developed. These decisions depend on their forecasts of the amounts of various types of legal business which will be available. Because such forecasts are inperfect, however, at a given time an excess of lawyers in any given hypothesized, there will then be an incentive to dip deeper into the available pool of malpractice cases. This hypothesis is tested and it is found that the estimated excess of lawyers over those required to perform other tasks is a significant factor in explaining the filing of malpractice claims.     

Contingency Fees, Settlement Delay, and Low-Quality Litigation: Empirical Evidence from Two Datasets

Although flat fees are common for divorces, wills and trusts,and probate, lawyers in personal injury cases generally arepaid by contingency fee or at an hourly rate. Arguments havebeen made that contingency fees increase low-quality, "frivolous"litigation but counterarguments suggest that contingency feesactually limit such litigation and instead it is hourly feesthat increase low-quality litigation. Using a difference indifferences test and data on a cross section of states in 1992,we test whether legal quality is lower under contingency orhourly fees. We also examine medical malpractice claims in Floridausing a time series centered around a law change that limitedcontingency fees. We also examine the impact of fee arrangementson the expected time to settlement. We find that hourly feesencourage the filing of low-quality suits and increase the timeto settlement (i.e., contingency fees increase legal qualityand decrease the time to settlement).     

Impact of hospitalist care on hospital malpractice premiums using California hospital data

This study assessed the impact of hospitalist care on hospital malpractice premiums. The retrospective cohort study used hospital financial data from the California Office of Statewide Health Planning and Development and the annual hospital survey conducted by the American Hospital Association. The sample included 1000 California hospitals from 2006 to 2010. The effect of hospitalist care on hospital malpractice premiums was evaluated using generalized estimation equation models with log link normal distribution after controlling for hospital and market characteristics, patient utilization and staffing patterns. In multivariable analyses, hospitals with more full-time hospitalists per average daily census were associated with lower malpractice insurance premiums. For example, a one-hospitalist increase per 100 daily censuses resulted in a 5.1% reduction in malpractice insurance premiums. Hospitalist care was associated with a reduction in malpractice insurance expenses. The data reveal that hospitalist care is more efficient and effective in patient treatment and preventing complications. The improved efficiency may reduce malpractice insurance expenses.     

ECONOMICS, ETHICS, AND THE PROBLEM OF BUILDING PEACE

To build peace it is necessary to convert what Hirshleifer (1976) has called "meta-constitutional" politics among nations into "constitutional" politics. To predict the eventual elimination of meta-constitutional politics and to suggest some steps that may hasten the process, Boulding's (1945) and North's (1981) explanations of the rise of civilization are combined with Coase's (1937) and Cheung's (1978) insights into organization theory and with Alchian's (1950) analysis of prediction that does not rely on rational behavior. The argument can be summarized in terms of game theory where technology, education, and population growth change the perceived payoff matrices.     

Medical Board Regulation of Physician Licensure: Is Excessive Malpractice Sanctioned?

This paper considers the deterrent effect that self-regulation has on a patients propensity to sue under malpractice law. A model of tort-driven self regulation is developed and its implications are examined using data on the disciplinary actions of the Florida Medical Board and data on closed malpractice claims. Doctors who in 1987-1991 generated abnormal rates of malpractice claims had a higher rate of disciplinary actions in the following period 1992-1995. Significantly, the evidence suggests that the Board may also be more likely to discipline older physicians and non-certified practitioners, perhaps in response to special interests of industry members.     

The fog of fraud – Mitigating fraud by strategic ambiguity

Most insurance companies publish few data on the occurrence and detection of insurance fraud. This stands in contrast to the previous literature on costly state verification, which has shown that it is optimal to commit to an auditing strategy. The credible announcement of thoroughly auditing claim reports is a powerful deterrent. Yet, we show that uncertainty about fraud detection can be an effective strategy to deter ambiguity-averse agents from reporting false insurance claims. If, in addition, the auditing costs of the insurers are heterogeneous, it can be optimal not to commit, because committing to a fraud-detection strategy eliminates the ambiguity about auditing. Thus, strategic ambiguity can be an equilibrium outcome in the market. Even competition does not force firms to provide the relevant information. This finding is also relevant in other auditing settings, like tax enforcement.     

Insurance Taxation and Insurance Fraud

It is common practice in the United States to impose a sales tax on insurance premiums. Insurance benefits are not taxed, and it is typically argued that they should not be taxed because they compensate for a loss. In this paper I present a case where the taxation of insurance benefits is preferable to the taxation of premiums. When insurance fraud is present—in the form of ex post moral hazard—a tax on insurance premiums increases the number of fraudulent claims in the economy, whereas a tax on insurance benefits may reduce fraud. More importantly, however, policyholders are made better off with a benefit tax than with a premium tax.     

Medical practice and malpractice litigation in an evolutionary context

We model the interactions between the behaviors of physicians and patients, subject to clinical and legal risks, by means of evolutionary game theory. We propose an original game in which patients may sue their physician for medical malpractice, and physicians have to choose between two alternative treatments, with different levels of benefits and risks. The safer treatment is also the less effective, therefore its provision corresponds, under the assumptions of our model, to practicing negative defensive medicine. We study the Nash equilibria, test their stability in the replicator dynamics, and analyze their welfare properties. We find that the accuracy of the judicial system plays an important role, with possible counter-intuitive effects related to legal reforms. If the court is not sufficiently accurate, defensive medicine can be favored, paradoxically, by an increase in the probability that defensive physicians are sanctioned by the court. A similar outcome can be generated also by an increase in the compensation paid to patients by physicians, when sanctioned for medical malpractice.     

The role of peer imitation in agricultural index insurance adoption: Findings from lab-in-the-field experiments in Kyrgyzstan

Frequent climate shocks require farmers in developing countries to increase their resilience. Although index insurance is often discussed as a promising climate adaptation strategy, take-up rates are still low. This study primarily explores the role of peer behavior as peer imitation in the demand for three marketable and unsubsidized crop index insurance options. Furthermore, the influence of trust and understanding is investigated. We collected data in lab-in-the-field experiments among farmers in Kyrgyzstan, where index insurance is planned for imminent implementation. Applying ordered logit estimations, our results show significant and strong peer imitation effects. Imitation attitudes decrease with own insurance experience and received insurance payouts, but intensify with peer size, insurance trust and practical insurance understanding. While trust robustly increases index insurance adoption, understanding effects only gain significance in the dynamic perspective. These findings underline the importance of community-based extension treatments and trust toward the uptake of innovative agricultural technologies in the first steps of dissemination.     

The effect of managerial ability on dividend policy: how do talented managers view dividend payouts?

We contribute to the literature on dividend policy by relaxing Miller and Modigliani’s (1961) perfect capital market assumptions and incorporating a factor that has not been investigated before, that is, variation in managerial ability. Based on more than 24 000 observations across over 20 years (1989–2011), our results show that firms with more talented executives are more likely to pay dividends and, among firms that pay dividends, pay significantly larger dividends. A rise in managerial ability by one SD raises the propensity to pay dividends by 27% and, for firms that pay dividends, increases dividend payouts by 29%. Our results are consistent with the notion that talented managers, confident in their ability to keep the firm profitable, are more willing to pay larger dividends because they are less concerned about having to reduce dividends in the future. Further analysis shows that our results are not likely vulnerable to endogeneity.     

Reverse moral hazard of liability insurers: evidence from medical malpractice claims

This study investigates putative differences in the legal defense of medical malpractice claims between liability carriers with distinct ownership forms: doctor-controlled and commercial-stock. The scope of a carrier's legal defense is determined by claim characteristics, such as injury severity and liability, and possibly the doctor's private costs from settling or losing a claim. When a carrier does not internalize the doctor's private costs from losing or settling a claim, then a conflict of interest arises as the carrier provides a lower level of legal defense than preferred by the doctor (i.e., reverse moral hazard). The perception is that doctor-sponsored carriers mitigate such conflicts of interest. If this is the case, we should expect to see differences in the amount spent by the carrier in defense of the doctor and the propensity to settle claims. To test these expectations, we use medical malpractice claims filed in Florida between 1985 and 1990. We indeed find differences in legal defense in terms of amount spent on legal defense and settlement rate between carriers with different ownership. The doctor-sponsored carrier we investigated was less likely to settle out-of-court, and did spend more on a doctor's legal defense than stock carriers.     

An estimation of the demand and supply for physician services using a panel data

Using the single-equation and simultaneous equations methods, demand and supply for physician services at medical practices are estimated with panel data, which is primarily based on American Medical Association divisional surveys. Fixed effects and no-effects models are employed for estimation of the parameters of the simultaneous equations and their elasticities. The results suggest that the demand is highly income inelastic. However, private insurance and Medicaid raise the rate of utilization. The adverse effect of uninsured is also evident, though it is not as high as private insurance. Evidence also supports the demand inducement hypothesis and points to the rising demand for health care as the U.S. population is aging. The supply function parameters generally demonstrate their expected pattern. It is notable that the malpractice liability premiums exhibit a negligible effect on the supply of office visits.     

A Cat Bond Premium Puzzle?

Catastrophe bonds, the payouts of which are tied to the occurrence of natural disasters, offer insurers and corporate entities the ability to hedge events that could otherwise impair their operations to the point of insolvency. At the same time, cat bonds offer investors a unique opportunity to enhance their portfolios with an asset that provides a high-yielding return that is uncorrelated with the market. Despite the attractive nature of these investments, spreads in this market remain considerably higher than the spreads for comparable speculative-grade debt. This article uses behavioral economics to explain the reluctance of investment managers to invest in these products. Finally, we use simulations to illustrate the attractiveness of cat bonds under a wide range of outcomes, including the possible effects of model uncertainty on investor appetite for these securities.     

Male and Female Recoveries in Medical Malpractice Cases

This study analyzes male and female recovery resulting from medical malpractice injuries to discern the importance to the recovery differential of gender differences in recoveries for medical malpractice injuries. We find that the pattern of recoveries follows one similar to that found in studying wage differentials between males and females. Differences in the relative magnitudes of foregone earnings and nonmarket loses are reflected in the composition of recoveries. In addition, we find a recovery gap in which females receive substantially less in recoveries when they receive male's average compensation for medical malpractice injuries. However, only a small portion of the male and female recovery differential is explained by the characteristics of the claims, leaving a substantial portion of the differential unexplained.     

A model of takeovers of foreign banks

This paper investigates the determinants of the takeover of a foreign bank by a domestic bank whereby the former becomes a branch of the latter. Each bank is initially supervised by a national agency that cares about closure costs and deposit insurance payouts, and may decide the early closure of the bank on the basis of supervisory information. Under the principle of home country control, the takeover moves responsibility for both the supervision of the foreign bank and the insurance of the foreign deposits to the domestic agency. It is shown that the takeover is more likely to happen if the foreign bank is small (relative to the foreign banking market) and its investments are risky (relative to those of the domestic bank). Moreover, the takeover is in general welfare improving for both countries.     

农户水稻种植保险购买决策的影响因素分析——基于福建省浦城和永安的数据

利用2010年8—10月对福建省浦城和永安的农户购买水稻种植保险调查的数据,对福建省水稻种植保险的发展进行了概述,对影响农户购买水稻种植保险的因素进行了分析。结果表明:农户的性别特征、种植规模、对水稻种植保险的认识及是否有听说过理赔等,对农户购买水稻种植保险的影响显著,而教育程度、种植年限及产量变异系数对购买决策的影响不明显。     

新制度经济学视角下保险理赔难的原因与对策研究

保险理赔难近年已经成为消费者投诉的一个重点,制约中国保险业健康发展。通过使用制度经济学的方法,分析其原因主要就是理赔制度的不完善和监督制度的低效率。通过完善保险理赔和保险公估制度,建立全国信用征信体系等措施,有助于解决理赔难的问题,促进保险业的健康发展。     

Optimal reinsurance policies with two reinsurers in continuous time

An optimal reinsurance problem of an insurer is studied in a continuous-time model, where insurance risk is partly transferred to two reinsurers, one adopting the expected-value premium principle and another one using the variance premium principle. The insurer aims to select an optimal reinsurance arrangement to minimize the probability of ruin. To provide an easy-to-implement solution to the problem, (semi)-explicit expressions for the optimal reinsurance strategies as well as the minimal ruin probabilities are derived for several claims distributions. Numerical studies including a real-data example based on the Danish fire insurance losses are provided to illustrate the solution of the problem. Our empirical results based on the Danish data reveal that the heavy-right-tailedness of claims distributions has a significant impact on the optimal reinsurance strategies and has a quite pronounced impact on the residual risk described by the minimal ruin probability.