Managed Care


Malpractice payouts flat but premiums rise 120%

MANAGED CARE August 2005. © MediMedia USA
Compensation Monitor

Malpractice payouts flat but premiums rise 120%

MANAGED CARE August 2005. ©MediMedia USA

Ordinarily, this Compensation Monitor department describes changes in the various payments to providers, folks who work at health plans, and others in the health care industry, but this month, we use compensation as it is usually understood in civil court. From 2000 to 2004, the amount that major malpractice insurers have collected in premiums has more than doubled, yet their payouts for compensatory damages have remained essentially flat.

Nice work if you can get it!

Physicians are vociferous in their complaints about malpractice premiums, and according to the Center for Justice and Democracy, a consumer advocacy group, maybe they have good reason.

In the report "Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry," the group found that major carriers increased their net premiums by 120.2 percent, but their net claims payments rose by only 5.7 percent.

In fact, the insurers took in approximately three times as much in premiums as they paid out in claims. Payouts as a percentage of premiums fell from 69.9 percent to 33.6 percent on a net basis.

During the same period, there was a 25 percent decline in the incurred-loss ratio — the amount the insurers estimated they would pay out in the future divided by the premiums they earned.

The report analyzed the performance of each of the 15 largest medical malpractice insurers in the United States, as rated by A.M. Best, the principal rating service for the insurance industry.

Source: Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry, Center for Justice and Democracy, July 2005


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