New York — Americans for Insurance Reform (AIR), a New York-based coalition of consumer and public-interest groups, has released results of a study examining insurance-industry data to determine causes of the most recent malpractice insurance crisis for doctors, reports PRNewswire-USNewswire.
Contrary to insurance-industry views of the problem, the AIR study suggests that the 2001 to 2004 insurance crisis was not caused by claim, payout or legal-system factors. Rather, the study says, the crisis occurred because inflation-adjusted payouts did not increase during those years — when doctors’ premiums ballooned — but remained flat or even decreased.
The study suggests that medical malpractice insurance premiums rose more during the years examined than was justified by insurance payouts, and that at no time were recent increases in premiums linked to actual payouts. Rather, say the study’s authors, premiums reflected a cyclical phenomenon known as a “hard market,” three of which have occurred in the insurance industry in the past 30 years.
During this same period, claims the study, medical-malpractice insurers unnecessarily increased reserves (used for future claims) despite no increase in payouts or any trend suggesting large future payouts. These reserve increases in the years 2001 to 2004 may have accounted for 60 percent of the price increases for malpractice insurance during the period.
PRNewswire-USNewswire quotes study author J. Robert Hunter, director of insurance for the Consumer Federation of America, as saying, “This report is proof positive that the huge medical malpractice insurance rate increases between 2000 and 2003 were not related to a jump in claims. Rather, as in the mid-1970s and mid-1980s, they were simply the result of insurance-industry economics, supplemented by insurer hype intended to divert attention away from the mismanagement by insurers that caused the crisis.”
Co-author Joanne Doroshow, Executive Director of the Center for Justice & Democracy, is quoted as saying, “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.”
The AIR study can be viewed at: http://insurance-reform.org.
