A Washington trial bar association released a report accusing medical malpractice insurers of price-gouging doctors with excessive premiums.
The American Association for Justice (AAJ) report said in addition to charging excessive premiums, insurers are needlessly contributing to the growing cost of health care.
The 22-page report, written by former Missouri Insurance Commissioner Jay Angoff, is based on recent annual reports from the top 15 medical malpractice insurers as rated by Oldwick, N.J.-based A.M. Best Co., the group said.
AAJ's report states that insurers are artificially raising doctors' premiums and misleading the public to believe that a crisis exists.
According to the study:
o Medical malpractice insurers saw losses and projected losses plummet by 48 percent over the period 2003 to 2006.
o These incurred losses (projected future loses) have declined every year for the past five years.
o Insurers' 2006 surplus is 43 percent greater than their surplus in 2003 and five times the state-minimum surplus for insurer stability.
o Only three of the 15 leading insurers issued dividends to doctors in 2006.
Taking into account both paid (actual claims paid) and incurred losses, the report said that despite decreases, malpractice rates for doctors continue to increase.
The association is calling for a review of the insurance industry's practices, which it called "unscrupulous."
Lawrence Smarr, president of the Physician Insurers Association of America in Rockville, Md., said this report was similar to a report that Mr. Angoff did in 2005 that the National Association of Insurance Commissioners and the American Academy of Actuaries analyzed and found suffered "from shortcomings."
He said the most glaring problem is the report does not include loss adjustment expense or underwriting expenses when discussing the premium dollar. The report also fails to include companies that have suffered significant losses.
Mr. Smarr also disputed the surplus numbers Mr. Angoff cited as more than sufficient. The 530 percent ratio of actual surplus to authorized control level is insufficient, he said, especially compared to a property-casualty industry history average of more than 800 percent.
"He leaves it up to the uninitiated reader to conclude these companies are overcapitalized when they are not," he said.
"After six consecutive years of losses, the medical liability marketplace is finally returning to profitability. They can't lose forever or they will go out of business, and several have," said Mr. Smarr, adding that Mr. Angoff had not included this in the report.
"The unfortunate thing about this report is that it is truly an incomplete picture," said Mr. Smarr. "I wish at some point [he] would produce a credible study that would analyze the industry, but we always see something that is incomplete."
A copy of the report is available at www.justice.org/pressroom/angoff.
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