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Study claims malpractice rates rising not payouts { July 7 2005 } Original Source Link: (May no longer be active)
http://www.newsday.com/news/local/wire/connecticut/ny-bc-ct--medicalmalpractic0707jul07,0,2265146.story?coll=ny-region-apconnecticuthttp://www.newsday.com/news/local/wire/connecticut/ny-bc-ct--medicalmalpractic0707jul07,0,2265146.story?coll=ny-region-apconnecticut
Study claims malpractice rates, not payouts, rising
By NOREEN GILLESPIE
Associated Press Writer
July 7, 2005, 1:49 PM EDT
HARTFORD, Conn. -- The rates insurers charge physicians for medical malpractice coverage rose dramatically over the past five years, but the amount insurers paid out in claims did not, according to a study from a consumer advocacy group.
The study, released Thursday by the Center for Justice & Democracy, found that malpractice rates increased by 120 percent from 2000 through 2004, while the amount of money paid in claims went up by 5.7 percent.
"This is wacky," said Jay Angoff, a former insurance commissioner in Missouri during the 1990s and the primary author of the study. "Now what's the insurance companies' defense to this?"
Researchers looked at annual statements filed with state insurance departments by the nation's 15 largest medical malpractice insurers.
The report also found that the leading insurers increased their surpluses _ money accumulated beyond what they anticipate needing to pay future claims _ by a third.
"The extra cherry on top for the industry, and the extra knife in the gut for doctors, is not only did claims payments go down ... the companies also added to their surpluses," Angoff said.
Insurers were critical of the study's methodology, saying that it failed to take into account other costs insurance companies face, such as underwriting. Larry Smarr, president of the Maryland-based Physician Insurers Association of America, said if those costs had been included, it would have shown a much different picture of the companies' finances.
Because it takes time for claims to materialize and be paid, companies must collect premiums based on future cost expectations, he said.
"We know it takes on average 4 1/2 years from when an accident happens until a claim is paid," Smarr said. "Comparing the premiums collected today with the claims that were incurred as long as 10 years ago is a totally inappropriate comparison."
Consumer advocates and public officials said the study has the potential to recast the often bitter debate about who is responsible for rising malpractice rates: doctors, trial lawyers or the industry.
Connecticut Attorney General Richard Blumenthal called on the National Association of Insurance Commissioners to review the study, and suggested a model law would be useful for state legislatures.
"Clearly the numbers underscore the need for much tougher and much more aggressive oversight to prevent and punish profiteering," Blumenthal said.
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On the Net:
Center for Justice & Democracy: http://www.centerjd.org/
PIAA: http://www.thepiaa.org/
Copyright 2005 Newsday Inc.
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