An Empirical Investigation of the Costs of Adopting No Fault Insurance Systems: 1971-1980

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
James K. Weeks, Dean (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: Numerous arguments for nofault have been adduced by proponents. These include social adequacy, fairness and equity, and promptness of reparation, but the most frequently propounded advantage is cost. Nofault should reduce the cost of the automobile insurance system because the persons who would otherwise seek recovery in civil court from careless drivers are not given this opportunity. A multitude of legal system related activities and associated costs are eliminated under nofault. Perhaps the most important dimension of nofault in this respect is the limitation of recovery to actual economic loss and the reduction in the amount of litigation that ensues from automobile accidents. For this reason, it has been asserted that a nofault system will reduce the cost of automobile insurance. It is the purpose of this study to evaluate and test the a priori reasoning regarding the cost of liability insurance and fault systems ... The objective of this research is to investigate the incremental cost of adopting nofault insurance for automobile bodily injury losses. The dependent variable is bodily injury reparations pure premium which includes bodily injury liability incurred losses, medical payments incurred losses, uninsured motorist incurred losses, underinsured motorist incurred losses, and personal injury protection incurred losses. Included in all the above are loss adjustment expenses. The total is divided by the number of exposure units, earned car years. Thus the pure premium amounts to the cost of all automobile bodily injury reparations on a per automobile basis.

Additional Information

Journal of Insurance Regulation, 2 (2), 168-175.
Language: English
Date: 1983
nofault, automobile insurance, costs, bodily injury, losses, reparations, underinsured motorist, uninsured motorist, pure premium

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