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Actuary Counters Hunter On Med Mal Insurance Crisis

In an article published on this page in the Oct. 7 edition of National Underwriter, J. Robert Hunter, director of insurance for the Consumer Federation of America, concluded that the cause of the current medical malpractice crisis was not an explosion of costs but rather the downturn in the economic business cycle and alleged mismanagement of insurance companies.

I am a principal and consulting actuary with a large consulting firm, a Fellow of the Casualty Actuarial Society, and a Member of the American Academy of Actuaries. My clients include both commercial insurance buyers (namely large hospitals) and Fortune 500 companies as well as insurance companies. My intent here is to provide an unbiased critique and opinion of Mr. Hunters conclusions.

In his article, Mr. Hunter provided an exhibit (Chart 2 in his article) to prove his main point–that “premiums rise and fall with the economic cycle, but paid losses do not.”

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