Tort law and liability insurance

Abstract

The interaction between tort law and liability insurance is a complex problem that is difficult to deal with. This article provides a broad overview by distinguishing two approaches or models of the tort/insurance interface. One is the Deterrence Model in which tort law takes the leading role, whereas insurance is an auxiliary, and at times problematic, device. The alternative approach is the Compensation Model in which tort and insurance switch roles in order to provide optimal compensation to those in need. From there on, it is only a small step to no-fault schemes currently considered in some European countries as a substitute for traditional medical malpractice law. © 2006 The International Association for the Study of Insurance Economics.