Studies in the Area of Economic Law Reported from Stanford Law School (Subrogation and the Theory of Insurance When Suits Can Be Brought for Losses Suffered)

2019 JUL 02 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- A new study on Economics - Economic Law is now available. According to news reporting originating from Stanford, United States, by NewsRx correspondents, research stated, “The theory of insurance is considered here when an insured individual may be able to sue another party for the losses that the insured suffered-and thus when an insured has a potential source of compensation in addition to insurance coverage. Insurance policies reflect this possibility through so-called subrogation provisions that give insurers the right to step into the shoes of insureds and to bring suits against injurers.”

Funders for this research include John M. Olin Program in Law and Economics at Stanford Law School, John M. Olin Center for Law, Economics, and Business at Harvard Law School.

Our news editors obtained a quote from the research from Stanford Law School, “In a basic case, the optimal subrogation provisions involve full retention by the insurer of the proceeds from a successful suit and the pursuit of all positive expected value suits. This eliminates litigation risks for insureds and results in lower premiums-financed by the litigation income of insurers, including from suits that insureds would not otherwise have brought.”

According to the news editors, the research concluded: “Moreover, optimal subrogation provisions are characterized in the presence of moral hazard, administrative costs, and non-monetary losses, and it is demonstrated that optimal provisions entail sharing litigation proceeds with insureds in the first two cases but not when losses are non-monetary.”

For more information on this research see: Subrogation and the Theory of Insurance When Suits Can Be Brought for Losses Suffered. The Journal of Law Economics and Organization, 2018;34(4):619-649. The Journal of Law Economics and Organization can be contacted at: Oxford Univ Press Inc, Journals Dept, 2001 Evans Rd, Cary, NC 27513, USA.

The news editors report that additional information may be obtained by contacting A.M. Polinsky, Stanford Law School, Stanford, CA 94305, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/jleo/ewy008. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)