NBER Working Papers by Patricia Born

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Working Papers

July 2006The Catastrophic Effects of Natural Disasters on Insurance Markets
with W. Kip Viscusi: w12348
Natural catastrophes often have catastrophic risks on insurance companies as well as on the insured. Using a very large dataset on homeowners%u2019 insurance coverage by state, by firm, and by year for the 1984 to 2004 period, this paper documents the positive effect on losses and loss ratios of both unexpected catastrophes as well as large events that the authors term %u201Cblockbuster catastrophes.%u201D Insurers adapt to these catastrophic risks by raising insurance rates, leading to lower loss ratios after the catastrophic event. There is a widespread event of unexpected catastrophes and blockbuster catastrophes that reduces total premiums earned in the state, reduces the total number writing insurance coverage in the state, and leads to the exit of firms from the state. Firms with low...

Published: Patricia Born & W. Viscusi, 2006. "The catastrophic effects of natural disasters on insurance markets," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 55-72, September. citation courtesy of

March 2006The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses
with W. Kip Viscusi, Tom Baker: w12086
Whereas the literature evaluating the effect of tort reforms has focused on reported incurred losses, this paper examines the long run effects using a comprehensive sample by state of individual firms writing medical malpractice insurance from 1984-2003. The long run effects of reforms are greater than insurers' expected effects, as five year developed losses and ten year developed losses are below the initially reported incurred losses for those years following reform measures. The quantile regressions show the greatest effects of joint and several liability limits, noneconomic damages caps, and punitive damages reforms for the firms that are at the high end of the loss distribution. These quantile regression results show stronger, more concentrated effects of the reforms than do the OLS ...

Published: Born, Patricia, W. Kip Viscusi and Tom Baker. “The Effects of Tort Reform on Medical Malpractice Insurers’ Ultimate Losses.” Journal of Risk and Insurance 76, 1 (March 2009): 197-219. citation courtesy of

February 1998Does Spending on Medical Services Change as HMOs Grow and Mature?
with Rosalie Liccardo Pacula: w6423
This research examines the cost structure of a nationally representative sample of HMOs from 1991-1994 to determine whether cost savings achieved through enrollment growth and age of the plan are shared with any of the factors of production. The data are obtained from Health Care Investment Analysts. A generalized translog cost function is used to derive factor share equations for four intermediate groups of inputs used by an HMO: physician services, other medical provider services, hospital services and administrative services. We estimate the system of annual factor shares using seemingly unrelated regression analysis and find that both plan size and age have a significantly positive effect on the level of plan expenditure on physicians, other medical providers and hospitals. Examina...
September 1995Organizational Form and Insurance Company Performance: Stocks versus Mutuals
with William M. Gentry, W. Kip Viscusi, Richard J. Zeckhauser: w5246
One unusual feature of the U.S. property-casualty insurance industry is the coexistence of stock and mutual companies. This paper explores the performance of these forms in the industry through a dynamic assessment of how mutual and stock insurance companies respond to differences in their underwriting environment. Agency theories suggest that the stock company may be more 'opportunistic' and less obligated to their insureds than mutuals. This article assesses the responses by stock and mutual firms to changes in the underwriting environment from 1984 to 1991, using measures of individual firms' performance, by state and by line, in eight different lines of insurance. Stock companies are more likely than mutuals to reduce their business in unprofitable situations, and have higher losse...


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