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New Data Confirms That Doctors Were Price-Gouged

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Americans for Insurance Reform (AIR) announced today the release of Stable Losses/Unstable Rates
2007, a new study that examines fresh insurance industry data to determine
what caused the most recent medical malpractice insurance crisis for
doctors. The full study can be found at: http://insurance-reform.org.
The study by AIR, a coalition of over 100 consumer and public interest
groups representing more than 50 million people, finds that the insurance
crisis that hit doctors between 2001 and 2004 was not caused by claims,
payouts or legal system excesses as the insurance industry claimed. Rather,
according to the industry’s own data:
— Inflation-adjusted payouts per doctor not only failed to increase
between 2001 and 2004, a time when doctors’ premiums skyrocketed, but
they have been stable or falling throughout this entire decade.
— Medical malpractice insurance premiums rose much faster in the early
years of this decade than was justified by insurance payouts.
— At no time were recent increases in premiums connected to actual
payouts. Rather, they reflected the well-known cyclical phenomenon
called a ”hard” market. Property/casualty insurance industry ”hard”
markets have occurred three times in the past 30 years.
— During this same period, medical malpractice insurers vastly (and
unnecessarily) increased reserves (used for future claims) despite no
increase in payouts or any trend suggesting large future payouts. The
reserve increases in the years 2001 to 2004 could have accounted for 60
percent of the price increases witnessed by doctors during the period.
Study author J. Robert Hunter, Director of Insurance for the Consumer

Federation of America, former Federal Insurance Administrator and Texas
Insurance Commissioner, said: ”This report is proof positive that the huge
medical malpractice insurance rate increases between 2000 and 2003 were not
related to a jump in claims. Rather, as in the mid-1970s and mid-1980s,
they were simply the result of insurance industry economics, supplemented
by insurer hype intended to divert attention away from the mismanagement by
insurers that caused the crisis.”

Co-author Joanne Doroshow, Executive Director of the Center for Justice
& Democracy, said, ”This report shows that the real reasons medical
malpractice insurance rates rose so dramatically for doctors during this
decade was market forces and dropping interest rates, not because of a
sudden increase in medical malpractice jury awards or payouts. These
periodic insurance crises will continue to occur unless lawmakers take
steps to reform the insurance industry. State lawmakers must strengthen
state insurance regulatory laws and Congress must repeal the decades-old
McCarran Ferguson Act, which exempts the insurance industry from anti-trust