A Report on the Liability Insurance Crisis in the State of California

Report #74, July 1986

OVERVIEW

This study identifies five major factors in the liability insurance crisis in California, including the evolution of tort reform, lack of predictability in risk assessment, unsound rate-setting practices, withdrawal of the reinsurance market, and the Insurance Commissioner’s lack of authority in the rate-setting process.

The report contains 16 findings and 16 recommendations, which include establishing a “cap” on the recovery of compensatory damages in personal injury actions; prohibiting collusion between plaintiffs and settling defendants; and establishing a stricter burden of proof for punitive damages.