Re: Net Malpractice Payouts Stayed Flat, Net Premiums Increased 120%
From: Anna Meenan, MD (annam@uic.edu)
Thu Jul 7 16:01:38 2005
The second half (Methodology Questions) is where you'll find the
relevant information. Necessary reserves are calculated based on
anticipated losses years in the future. I've said it before and I'll
say it again: The University of Illinois is self-insured and non-profit.
Actuarial calculations of future losses based on what's in the pipeline
now and estimated future risks resulted in an increase in the levy on my
campus (the smallest one, by the way) last year from $795,000 to $1.5
mil. I'm no expert on this, but I can't think of any other reason we
would take more money out of one of our pockets and put it away in
another pocket, unless we thought it needed to be there.
--
Anna Meenan, MD
At Thu, 7 Jul 2005, φΉ@?wR. Daniel Braun wrote:
>
>.
>
>Net Malpractice Suit Payouts Stayed Flat, Net Premiums Increased 120% Over Last
>Five Years, Study Says
>
>Net medical malpractice claims paid by 15 large insurers nationwide did not
>increase between 2000 and 2004, but net premiums increased by 120% over the
>same period, according to a study scheduled for release on Thursday by the
>consumer advocacy group Center for Justice and Democracy
><http://www.centerjd.org/>, the New York Times
><http://www.nytimes.com/2005/07/07/business/07insure.html?> reports. The claims
>totals in the study are calculated net of reinsurance payments. According to
>the
>study, between 2000 and 2004, the increase in malpractice insurance premiums
>collected by the 15 insurers was 21 times the increase in paid claims. In
>addition, between 2000 and 2004, the incurred-loss ratio -- the ratio of claims
>to premiums collected -- for the 15 insurers decreased by almost 25% to 51.4%,
>the study found. Nine of the 15 insurers reviewed in the study are mutual
>insurers owned by policyholders, and three are publicly traded companies that
>are part of larger conglomerates. The other three insurers reviewed are
>publicly traded companies that specialize in malpractice, and their stock
>prices each have each increased by more than 100% since May 2002. Jay Angoff, a
>consultant on the study and a former Missouri insurance commissioner, said, "In
>recent years, medical malpractice hasn't been unprofitable, but it's been
>phenomenally profitable." According to Connecticut Attorney General Richard
>Blumenthal (D), the results of the study "have the potential to alter the
>debate fundamentally from seeming to cast the rapacious personal injury lawyers
>as the complete culprits and the insurers as innocent bystanders with doctors
>as
>victims to the insurers as equally responsible, if not more so."
>
>--
>
>Methodology Questions
>
>Insurance industry officials questioned the methodology of the study. They said
>that the comparison of malpractice claims paid by insurers with premiums
>collected is unfair because claims often take eight to 10 years to develop and
>companies must maintain extra reserves. Lawrence Smarr -- president of the
>Physicians Insurers Association of America
><http://www.nytimes.com/2005/07/07/business/07insure.html?>, which represents
>insurers owned by physicians -- said, "It's a meaningless comparison that no
>respectable actuary would consider." He added that malpractice insurance
>premiums have increased because juries have issued higher awards in lawsuits
>and insurers have used those awards as justification for settling more claims.
>Smarr said, "The real problem is claim severity. It means that juries are
>awarding higher amounts and jury verdicts drive the potential cost of the claim
>so that makes settlements rise." American Medical Association
><http://www.nytimes.com/2005/07/07/business/07insure.html?> President Edward
>Hill said, "We have a proven record of the fact that the premiums will come
>down when you get strong liability reform. That's why we're pushing caps on
>noneconomic damages" (Anderson, New York Times, 7/7).
>
>Dean Huffman
>
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