Consumer Groups Say Market Forces, Not Claims, Caused Med Mal Crisis

Insurance Journal
Thursday, March 29, 2007

A consumer coalition has released a new study that disputes insurers' contention that the most recent medical malpractice insurance crisis for doctors was caused by rising costs.

The study, Stable Losses/Unstable Rates 2007, by Americans for Insurance Reform (AIR) , a coalition of over 100 consumer and public interest groups, finds that the insurance crisis that hit doctors between 2001 and 2004 was not caused by claims, payouts or legal system excesses as the insurance industry claimed. Rather, the study of the industry's own data, found:

Inflation-adjusted payouts per doctor not only failed to increase between 2001 and 2004, a time when doctors' premiums skyrocketed, but they have been stable or falling throughout this entire decade.

Medical malpractice insurance premiums rose much faster in the early years of this decade than was justified by insurance payouts.

At no time were recent increases in premiums connected to actual payouts. Rather, they reflected the well-known cyclical phenomenon called a ''hard'' market. Property/casualty insurance industry ''hard'' markets have occurred three times in the past 30 years. …

Co-author Joanne Doroshow, executive director of the Center for Justice & Democracy, said the report shows the crisis was a function of market forces.

''This report shows that the real reasons medical malpractice insurance rates rose so dramatically for doctors during this decade was market forces and dropping interest rates, not because of a sudden increase in medical malpractice jury awards or payouts," Doroshow maintained.

She used the report to advocate for stronger regulation of the insurance industry.

"These periodic insurance crises will continue to occur unless lawmakers take steps to reform the insurance industry. State lawmakers must strengthen state insurance regulatory laws and Congress must repeal the decades-old McCarran Ferguson Act, which exempts the insurance industry from anti-trust laws," Doroshow argued.

The full study can be found at:

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