URL: http://www.klores.com/index.php/62/Malpractice_Insurance_Companies_Found_To_Overstate_Their_Losses

Malpractice Insurance Companies Found To Overstate Their Losses

We hear every day from the insurance industry cries that malpractice premiums are driving doctors out of business, and the malpractice system is running amok. In 25 years of practice I have learned a great deal about malpractice insurance companies. Many of them are extremely profitable and looking to expand their business. (See for example the Balance Sheet of ProAssurance at www.ProAssurance.com.) Their profitability is often determined more by the quality of their investments and the stock market, and less by how much they pay out in claims.

A new study by a consumer group has shown that losses reported to state regulators, which are typically what is cited by insurance companies to justify rising premiums, were overstated. The study specifically found that losses were overstated by 31% between 1986 and 1994. The study was conducted by The Foundation For Taxpayer and Consumer Rights from Santa Monica, California, drawing data from annual reports filed with state regulators.

My Impression:

Recently the D.C. City Council was asked to look into the medical malpractice insurance question. Rather than imposing caps on victims' damages as the insurance companies lobbied for – the City Council decided to make efforts at reforming the malpractice insurance industry instead to keep doctors premiums down. Our lawmakers concluded that the way to keep doctors' premiums down was to regulate the insurance industry, not to victimize the patients who have already been injured by bad medical care. The new law requires an insurance company to open its books for public inspection before it can justify a rate increase. This is a breath of fresh air and hopefully will be a movement that will sweep the country and benefit everyone.

September 14, 2007