Personal Injury Law

Medical Malpractice Insurance Rates

By John A. Day

 From the American Association for Justice:

State tort reforms have provided a boon to insurance companies, leading to record profits while physician and patient premiums continue to skyrocket.

An analysis of data from the National Association of Insurance Commissioners (NAIC) and company annual statements shows malpractice insurer profits are 24 percent higher in states with caps.  In these cap states, insurers took in 3.5 times more in premiums than they paid out in 2008.  In contrast, insurers in states without caps took in just over twice what they paid in claims.

The findings also show absolutely no correlation between the cost of malpractice premiums and health insurance premiums.  For example, Maine has the ninth lowest malpractice premiums but the fourth highest health insurance premiums.  Conversely, Nevada has the third lowest health insurance premiums nationally, but malpractice premiums are the country's ninth highest, despite having a cap in place for eight years.

"The data are clear: tort reform is just another insurance company handout," said American Association for Justice President Anthony Tarricone.  "Insurers cried wolf and demanded tort reform, only to pocket the profits and never pass savings onto physicians or patients.  While 98,000 people die every year from preventable medical errors, it's nonsensical to limit patients' rights simply to fill insurance company coffers."

The report also shows how medical negligence laws were passed under false pretenses.  The medical malpractice insurance industry has seen a 47 percent increase in profitability in the last 10 years. Overblown "reported" losses were used by the insurance industry to justify new measures restricting the rights of those injured by medical negligence.

Now that over 30 states have malpractice caps, insurance companies are enjoying extremely high levels of profit. In 2008, the average profit of the 10 largest medical malpractice insurers was higher than 99 percent of Fortune 500 companies and 35 times higher than the Fortune 500 average.

Finally, the report explains the dynamics of the insurance cycle and trends in premium pricing, which are well-known by analysts within the insurance industry.  Remarkably, the industry's leaders are already positioning to claim another 'tort crisis' and to lobby for even more severe restrictions on patients' rights in 2012.

To view a copy of Insurance Company Handout: How the Industry Used Tort Reform to Increase Profits While Americans' Premiums Soared, visit http://www.justice.org/clips/Insurance_Company_Handout.pdf.

Full post as published by Day on Torts on December 10, 2009 (boomark / email).