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Medical Malpractice Insurance Premiums Dropping–and NOT Because of Tort “Reform”

Posted by Todd Hendrickson in Medical Malpractice | Q&A

I recently learned of an interesting article in the Medical Liability Monitor, an industry publication on medical malpractice. In the April 2008 issue, Phil Dyer, V.P. of Professional Liability Division of Kibble & Prentice, declares that the volatility in the healthcare professional liability market may finally be over. Mr. Dyer cites 6 reasons–and not one is tort “reform.”

  • Reinsurance Changes: Reinsurers, large companies who buy packages of insurance risk, have reduced their holdings in property insurance following Hurricane Katrina and are purchasing more malpractice risk packages, driving down the cost of reinsuring.
  • Reduced Frequency of Claims: The number of claims per bed for hospitals and the number of claims per doctor has dropped significantly in recent years. No reason is listed, but it would appear to be the result of better managing risk, as described below.
  • Reaping Rewards of Previous Years: This is my favorite! In recent years the insurers have hike premiums, dropped physicians and generally caused havoc. Now, as a result of a reduced frequency of claims, they are “reaping the rewards.” In other words, they are now seeing the profits from those years of sky high premiums that they were claiming they needed to keep from going broke! As a result of years of gouging hospitals and doctors, insurers are reaping record profits!
  • Companies Have Money to Spare: Obviously, the insurance companies don’t want their customers and the public to know this, but it is there in black and white and it is a direct quote: “With clean books of business, robust premiums and a favorable claims environment, there is a great deal of room for companies to be aggressive and lower rates.” Here we go again … the same cycle we’ve seen for years. The insurance companies cry wolf, raise rates and drop coverage claiming that the lawyers are driving doctors out of business, then the companies suddenly have “money to spare,” begin cutting rates, insuring doctors who shouldn’t be practicing and then the cycle will repeat, ad nauseum.
  • Healthcare Delivery System is Better at Preventing Claims: This is the first thing that is actually good news for patients. In light of the skyrocketing premiums over the past few years, hospitals and doctors have worked to reduce mistakes, and they’ve been successful to some extent in doing this. Every attorney welcomes this.
  • The Trial Bar Cannot Afford to Bring Cases that Have Little or No Settlement Value: This is the industry’s only attempt to indirectly link their improved fiscal position with tort reform, and it is simply a fantasy. Those of us who specialize in Medical Malpractice have never taken marginal cases. We have never been able to spend money to investigate claims without merit. What does happen, as Mr. Dyer recognizes, is that attorneys who don’t concentrate in medical negligence cases can, and often do, prosecute cases where liability is not clear. They then often lose those cases and the health care industry rolls out the term “frivolous” to describe the suit. A loss does not mean frivolous. It just means that the attorney wasn’t able to prove the case.
  • What does this mean to patients? Probably not much. Hopefully, doctors and hospitals will continue to implement practice modifications that will “prevent claims.” Hopefully, the insurers will stay off the roller coaster of raising and lowering premiums so that doctors and hospitals can better predict these costs, but that probably won’t happen. Hopefully, the next time reinsurance costs go up because the reinsurers have found a better place to park their money, the insures won’t scream “tort reform” and try to take away the rights of the very patients who are injured by doctor’s and hospital’s negligence, but that probably won’t happen either. Maybe, just maybe, someone will pull this article from Medical Liability Monitor and waive it in the face of the insurance industry and cut off the argument. Maybe … but don’t hold your breath.In the mean time, trial attorneys will keep protecting the victims of medical negligence and dangerous products.

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