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Report Suggests Malpractice Insurance Price-Gouging

July 12, 2005

Malpractice Insurance • Malpractice Insurers Inflated Losses, Study Finds • Report Suggests Malpractice Insurance Price-Gouging • Report Finds No Link Between Doctors' Premiums and Malpractice Suits • GE: Malpractice Caps Don't Work

State officials are responding sharply to a study that suggests doctors are victims of price-gouging by insurance companies who continue to raise malpractice insurance premiums even as claims decline.

“The data in the Annual Statements filed under oath with state insurance departments, which this Report discloses, call into question much of what the medical malpractice insurance industry has been saying publicly during the past several years,” said Missouri Attorney General Jay Nixon.

“There is no excuse for malpractice insurers doubling their rates while their claims payments decrease.”

According to the study, released by the Consumer Federation of America, Public Citizen’s Congress Watch and U.S. PIRG, medical malpractice insurance rates for doctors have skyrocketed in recent years even though claim payments are down.

“The numbers underscore the need for much tougher, more aggressive oversight to prevent and punish profiteering,” Connecticut Attorney General Richard Blumenthal said. “Federal and state regulators should thoroughly scrutinize recent rate increases and take appropriate corrective action.

“Affordable medical malpractice insurance is critical to public health. Expensive insurance rates become a matter of life and death when they drive doctors out of business - as is happening in Connecticut and nationwide. Insurance company greed can be hazardous to our health.”

Michigan Office of Financial and Insurance Services Commissioner Linda A. Watters said she was "definitely disturbed" by the numbers in the report, which offers "evidence that doctors may be paying excessive premiums."

"In the market competition study that we recently issued, we considered loss ratios below 50 percent as patently excessive. If these carriers truly have loss ratios that that are this low and yet they are still increasing rates, one has to wonder if they're gouging,” Watters said.

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