Corporate and Statewide Perspectives on the Liability Insurance Crisis

  • George P. Richardson
  • Peter M. Senge
Conference paper


The costs associated with liability insurance in the United States are rising dramatically and persistently. Escalating medical malpractice premiums threaten the scope and availability of health care in many states. Increasing costs for automobile insurance have led to public referenda to cap premiums, in turn driving insurers out of practice in some states. Runaway litigation costs are prompting calls for major revisions in liability statutes and the whole tort liability system.

Over the past two years, two independent system dynamics studies of the rising costs of liability insurance have been conducted. One study focused on forces driving rising settlement costs within a leading property and liability insurance provider. That study has resulted in a learning laboratory to help managers throughout the firm form a more systemic perspective on how established policies and practices within the firm might contribute to rising costs. The other study, done for the New York State Insurance Department, looked at the problem of medical malpractice liability from a statewide regulatory perspective. It was designed to provide help to the state legislature in setting the state’s policy on rates over the next three years.

This paper assembles some of the work done in these two independent studies, reports on their findings, and discusses their policy implications. Of particular interest are implications of the Internal and external system dynamics perspectives on the problem — where they agree, where they disagree, and where they help to illuminate each other.


Policy Option Medical Malpractice Liability Insurance Litigation Cost Adjuster Capacity 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Andersen, DF., J.A.M. Vennix, G.P. Richardson, J. Rohrbaugh, & W.A. Wallace 1989. Processes for Eliciting and Mapping Knowledge for Model-Building. Proceedings of the 1989 International System Dynamics Conference, Stuttgart, FDR, July 1989.Google Scholar
  2. Huber, P, 1987. Injury Litigation and Liability insurance Dynamics. Science 238 (Oct 1987): 31–36.CrossRefGoogle Scholar
  3. Humphreys, P.C. and A.D. Wisuda. 1987. Methods and Tools for Structuring and Analyzing Decision Problems, vol. 1: A Review. Technical Report 87–1, Decision Analysis Group, London School of Economics and Politics, London, U.K.Google Scholar
  4. NYSID 1988. A Balanced Prescription for Change: Report of the New York State Insurance Department on Medical Malpractice. State of New York Insurance Department, 160 West Broadway, New York, NY 10013.Google Scholar
  5. Phillips, L. 1986. Hi-View. Decision Analysis Unit, London School of Economics and Political Science, London, U.K.Google Scholar
  6. Richmond, B., S. Peterson, and P. Vescuso 1987. Academic Users’ Guide to STELLA™ Lyme, NH: High Performance Systems, Inc.Google Scholar
  7. Schuman, S. and G.P. Richardson. 1987. Medical Malpractice Insurance. Policy Implications and Evaluations. New York State Insurance Department Policy Development Conferences: vols I (Conference Results) & II (Technical Appendices). Decision Techtronics Group, Rockefeller Institute of Government, Albany, NY.Google Scholar
  8. Senge, P.M. 1987. Catalyzing Systems Thinking Within Organizations. Forthcoming in Advances in Organization Development, F. Masarik, ed.Google Scholar
  9. Stenberg, L. 1980. A Modeling Procedure for Public Policy. Elements of the System Dynamics Method J. Randers, ed. Cambridge, MA: MIT Press.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1989

Authors and Affiliations

  • George P. Richardson
    • 1
  • Peter M. Senge
    • 2
  1. 1.Nelson A. Rockefeller College of Public Affairs and PolicyState University of New York at AlbanyUSA
  2. 2.Sloan School of ManagementMassachusetts Institute of TechnologyUSA

Personalised recommendations