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UT Austin research on liability insurance

Two researchers from The University of Texas at Austin, whose research on the impact of tort reforms on the liability insurance market is expected to provide $170 million in additional savings for Texas consumers during 1998, have been awarded the Central Texas Chapter of the American Society for Public Administration (A.S.P.A.)’s James W. McGrew Award for Public Policy Research.

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AUSTIN, Texas — Two researchers from The University of Texas at Austin, whose research on the impact of tort reforms on the liability insurance market is expected to provide $170 million in additional savings for Texas consumers during 1998, have been awarded the Central Texas Chapter of the American Society for Public Administration (A.S.P.A.)’s James W. McGrew Award for Public Policy Research.

The award was presented on May 5 to Alice Zimmerman, a 1997 graduate of the Lyndon B. Johnson School of Public Affairs, and LBJ School of Public Affairs Professor David Eaton.Their analysis stems from tort reform laws passed by the Texas Legislature in 1993 and 1995. The reforms were intended to reduce litigation costs and control the rising cost of insurance. In 1995, the Texas Legislature also passed a bill requiring the commissioner of insurance to adopt rate reductions so that Texas consumers could benefit from savings accrued as a result of tort reform.

The analysis, which included focus groups with insurance and legal professionals in counties across the state, revealed that a majority of participants found that insurers are saving money as a result of tort reform. A consensus by focus group participants revealed that the Legislature’s action resulted in lower indemnity costs and defense costs that are stable or lower than in previous years.

On Aug. 26, 1997, the commissioner of insurance held a hearing to assess the appropriateness of rate reductions in certain lines of liability insurance. LBJ School staff members presented findings from the study that were used by the staff of the Texas Department of Insurance to justify an incremental $170 million in insurance rate rebates for consumers over the rebates in 1997. After reviewing the evidence presented at the hearing, the commissioner adopted a rule on Oct. 20, 1997, which is expected to save Texas consumers $610.2 million in 1998.

For more information about Zimmerman’s “Tort Reform Analysis: A Study to Measure the Impact of Civil Justice Reforms on the Liability Insurance Market,” contact Eaton at (512) 471-9872. For a copy of the report call LBJ School Office of Publications (512) 471-4218.