The liability insurance crisis in the United States of America refers to a volatile economic period during the mid-1980s.
[1] In addition to increases in premium, many insurers took the following measures to limit the number and cost of claims: 1) changed policy coverage from an occurrence to a claims-made basis; 2) expanded exclusions; 3) raised deductibles; and 4) lowered policy limits on a per-claim basis, and 5) introduced the notion of aggregate total exposure.
The resulting crisis adversely affected a diverse range of organizations, including municipalities, social service providers and pharmaceutical, aircraft, sports equipment, and medical device companies.
[2] Many organizations in the nonprofit and government sector could no longer offer social, medical or recreational services due to the prohibitive cost or unavailability of liability coverage.
[5] As a result of widespread economic disruption, a large number of states adopted tort reforms to limit the dramatic surge in insurance losses and premiums.