Regulation by Liability Insurance: From Auto to Lawyers Professional Liability


Liability insurers use a variety of tools to address adverse selection and moral hazard in insurance relationships. These tools can act on insureds in a manner that can be understood as regulation. We identify seven categories of such regulatory activities: risk-based pricing, underwriting, contract design, claims management, loss prevention services, research and education, and engagement with public regulators. We describe these activities in general terms and then draw upon prior literature to explore them in the context of five areas of liability and corresponding insurance: shareholder liability, automobile liability, gun liability, medical professional liability, and lawyers professional liability. The goal is to develop a conceptual framework to guide qualitative research on liability insurance as governance for initial application to lawyers’ liability and insurance.

About the Author

Tom Baker is the William Maul Measey Professor of Law and Health Sciences, University of Pennsylvania Law School. Rick Swedloff is an Associate Professor of Law, Rutgers School of Law-Camden.

By uclalaw