Is Tort Reform The Cure For What Ails Med Mal Insurers?

Is Tort Reform The Cure For What Ails Med Mal Insurers?

At a time when doctors are walking off the job and insurers are either exiting the market or going out of business, a debate on medical malpractice reform at the federal level is clearly long overdue.

A war of words has broken out between those who blame skyrocketing pain and suffering and punitive damage awards for soaring malpractice premiums, and critics of the industry who claim insurers have only themselves to blame due to bad management or poor investment luck.

The truth is probably somewhere in betweenthe question is what to do about it. The answers should come during the course of Congressional hearings and studies into all the causes of the latest medical malpractice crisis.

The bottom line is that carriers cannot be forced to write the coverage or lower their prices if they are afraid of losing money or being driven into bankruptcy. The imposition of reasonable, national damage award standards that make the exposure more predictable to write should draw carriers back into the market and convince them to charge a more affordable premium.

On the other hand, we're talking about people who have been harmed, perhaps irreparably, by the honest mistakes or outright incompetence of their doctors and health care facilities. Injured victims must be able to recover reasonable compensation. Also, the awards must be painful enough to make health care providers far more careful when it comes to risk management.

To get controversial liability limits through Congress, however, solid proof will have to be provided that awards are indeed so outrageous that the result is that everyone's premiums soar, driving up health care costs and forcing good doctors out of the industry, which serves no one's interests.

This should be quite a battle, especially in the U.S. Senate, where a majority leader with an MD will lead the fight on behalf of the powerful insurance and health care industries against the mighty plaintiffs' bar. It is up to Congress to make sure a fair, just and effective compromise is reached to get carriers back into the market and doctors back on the job before any patients are harmed in the crossfire.

Farewell To A Gentleman

After 21 years analyzing the ups and downs of insurance industry stocks for National Underwriter, Thomas K. Meakin publishes his final column with us this week on page 27.

Tom's folksy style and easy humor about the market overall, as well as the many individual winners and losers on Wall Street, set him apart from other analysts focusing on this special niche. Tom was in the business long enough to realize never to automatically take any market rise or fall too seriously, given the quirks of the stock exchanges in general, and insurance stocks in particular, when a stiff wind could wipe out any industry rally.

We thank Tom for keeping an eye on the bulls and bears all these years, and wish him well in his future pursuits. In a field sullied recently by some rogues, Tom is a gentleman and a scholar, and there aren't many of them left.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 27, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.