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Medical Malpractice Premium Costs

Medical Malpractice Payouts Are Not the Cause of Rising Insurance Premiums, Another Study Finds

WASHINGTON, DC -- July 29, 2005 -- A new study shows that medical malpractice payouts to injured patients are not the cause of increases in doctors' insurance premiums. Entitled "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry," the report analyzes the performance of 15 insurers based on A.M. Best, the standard rating service for the insurance industry. The amount that the insurers collected in premiums more than doubled from 2000--2004, according to the study, while their claims payouts remained flat.

Some medical malpractice insurers even increased their premiums while both their claims payments and projected future claims payments decreased, the report said. They accumulated large surpluses over the last three years. These companies include:

  • Healthcare Indemnity, Inc. (HCI), an affiliate of HCA corporation, which increased its premiums by $173 million, or 88%, while its claims payments fell by $74 million, or 32%. In 2004, it paid out only 43 cents in claims for each premium dollar it collected.
  • ProNational Insurance Company, an affiliate of ProAssurance Corporation, which increased its premiums by $87 million, or 79%, while its claims payments fell by $43 million, or 63%. In 2004, it paid out only 13 cents in claims for each premium dollar it collected.
  • Medical Assurance, another ProAssurance affiliate, which increased its premiums by $151 million, or 89%, while its claims payments fell by a third. It paid out only 10 cents in claims for each premium dollar it collected in 2004.

Another recent study, this one out of the state of Texas, confirmed that increases in medical malpractice premiums are not caused by excessive lawsuits. The report was based on 15 years of data from the Texas Department of Insurance. Also in line with this conclusion, a medical journal article found that the average medical malpractice payment to patients grew by only 4% per year between 1991 and 2003 and did not cause any spikes in insurance premiums (Health Affairs, 2005 May 31; also see New Studies Again Find No Link Between Increased Doctors' Insurance Rates and Medical Malpractice Lawsuits.).

The Medical Malpractice Debate

Doctors' insurance expenses are a hotly debated issue. The insurance industry continues to claim that an increasing number of large medical malpractice awards force them to raise rates. Some politicians have used this argument to call for caps on the amount of damages that patients may claim for pain, suffering, and emotional distress.

On the other hand, consumer groups, patient advocates, and some government officials believe in limiting insurance rate increases and improving the level of medical care. Mike Kreidler, the Insurance Commissioner of the state of Washington suggested "making medicine safer" (New York Times, July 7, 2005). "Focusing exclusively on capping noneconomic damages ... will not have a pronounced dramatic impact," he said.

"The numbers underscore the need for much tougher, more aggressive oversight to prevent and punish profiteering," Connecticut Attorney General Richard Blumenthal commented in regard to insurers (News Release, Center for Justice and Democracy, July 7, 2005). "Federal and state regulators should thoroughly scrutinize recent [medical malpractice insurance] rate increases and take appropriate corrective action...Insurance company greed can be hazardous to our health."

"The data in the Annual Statements filed under oath with state insurance departments call into question much of what the medical malpractice insurance industry has been saying publicly during the past several years," said Missouri Attorney General Jay Nixon. "There is no excuse for malpractice insurers doubling their rates while their claims payments decrease."

Getting More Information about Medical Malpractice and Insurance Premiums

You can find the full text of "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry" on the web site of the Center for Justice & Democracy. The group commissioned the report, which was prepared by former Missouri Insurance Commissioner Jay Angoff. These groups co-released the study: Alliance for Justice, Consumer Federation of America, Public Citizen, USAction and U.S. PIRG.

For more general information about medical malpractice and medical errors, see Medical Malpractice Claims. If you have been injured because of a physician's negligence, please feel free to contact us. We have been handling medical/legal cases for over 20 years and work tirelessly to protect the rights of our clients.

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