Crisis in Tort Law? The Institutional Perspective

Abstract

The tort liability and insurance system displays symptoms of potential crisis. These symptoms are most acute in the context of personal injuries caused by business, professional, and government enterprise activities. Liability insurance rates have increased sharply. In some fields, affordable insurance has not been available at all from commercial insurers. Very large jury verdicts are increasingly common. The threat of enormous tort liabilities has driven major corporations to bankruptcy. Concerns over liability exposure have led to withdrawal of vaccines and other medical products from the market. Administrative costs of the tort system in areas such as products liability, medical malpractice, and toxic torts far exceed the compensation provided the injured. Not all observers regard these developments as particularly problematic or indicative of crisis. Some in fact view them as signs that tort law is energetically, and appropriately, deterring risky activities by pricing them at their social cost. But many more believe that there is a genuine crisis. These believers, however, are sharply divided as to the proper definition, diagnosis, and cure of the crisis. Three basic views have emerged. One group of observers focuses on insurance. They define the crisis in terms of a lack of available and affordable insurance, which some attribute to a lack of competition in the insurance in-