BIO

Hi! My name is Jennifer Light, and I am a first-year finance major. Initially, I am from Maryland but recently moved to Gainesville, Florida. I developed an interest in joining research because I enjoy learning high-level concepts to help contribute to reaching a newfound conclusion. My career goal is to become an investment banker, as I am interested in learning more about financial analysis and valuation modeling. Outside of academics, I enjoy exploring nature, biking, knitting, and going to the beach!

Texas Tort Reform and Commercial Auto Liability Litigation

Abstract

The purpose of this study is to examine the impact of Texas Tort reform on litigation and settlement trends with a broader context of social inflation. Throughout the decades, Texas tort reform underwent various drastic changes. Insurance companies left the state due to increasing average cost of claims and litigation costs, resulting in caps on non-economic damages being proposed and debated. Eventually, a non-economic damage cap of $250,000 was implemented in 2003, but there is no cap on actual damages that were incurred by patients. Analysis was done on written premiums, earned premiums, and direct losses incurred using data obtained from the National Association of Insurance Commissioners (NAIC,) which was sourced from S&P Capital IQ. The preliminary results demonstrate that the Texas Loss Ratio decreased heavily after 2000, and remained stagnant from 2003 to 2011. There has been a significant increase from 2012 until 2021. There is preliminary evidence that tort reforms had some impact on company profitability, but the magnitude and relevance require further research.

Keywords: Commercial Auto Liability