Conning Study Finds No Easy Malpractice Fix
NU Online News Service, June 18, 4:05 p.m. EDT? The nationwide medical malpractice crisis is depleting the capital base of that sector's insurers more rapidly than previously thought, a new study has found.
Conning Research & Consulting Inc. in New York, in a report titled "Medical Malpractice–Anatomy of a Crisis," also warned that failure to resolve the current crisis jeopardizes the future of the U.S. health care system.
"Unless we get meaningful and rapid reform, we forecast no end to the medical malpractice insurance industry's financial problems," predicted Michael Weinstein, Conning's director of research.
"Conning forecasts no improvement in industry loss ratios for at least the next two years. The implication is the prospect of de facto, technical insolvency for this line of business," Mr. Weinstein added.
The study noted that a sustained escalation in underwriting losses due to the increasing severity of claims costs has produced an unprecedented loss for the medical malpractice insurance industry.
Declining investment returns are not the root cause of rapidly rising medical malpractice insurance prices, contrary to popular belief, according to the study.
Rather, the study pointed out, the root cause is the industry's inability to accurately forecast losses, the foundation for adequately and appropriately pricing risk. As a result, insurance companies are exiting the medical malpractice insurance business, compounding the problem for insurance buyers, the study concluded.
"This is a national crisis which requires solutions at the state level," said Mr. Weinstein. "While we have examined a menu of potential solutions, we find no easy, quick fix to a very complex problem."
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