Liability Insurance and Accident Prevention: The Evolution of an Idea

Liability Insurance and Accident Prevention: The Evolution of an Idea - This paper traces the evolution of ideas about the relation between liability insurance and accident prevention, from the middle of the nineteenth century to the present. It shows how liability insurance was first defended against the criticism that it would reduce safety incentives, primarily on the ground that it would promote the compensation of accident victims. It then reviews the evolution of these ideas in the major debates about insurance and tort reform that occurred over the next century and a half. What this review reveals is not a slow and steady evolution of thought. It is instead a story of basic insights about the relation between liability insurance and accident prevention that were recognized relatively early, but that went essentially unappreciated and undeveloped over a period of many decades, largely because there was such a heavy concern with the compensation of accident victims among those who thought and wrote about tort liability during this period. Only when subsequent scholars and policymakers ceased arguing about tort liability and its reform almost exclusively in social welfare terms and began also to think of tort as the more complex and mixed system that it actually is, was it possible for insights about the relation between liability insurance and accident prevention to play a more significant role than they had until that time.