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Overstated Med Mal Losses

A consumer group which watches the insurance industry has determined that insurance companies pad their losses by 50% or so when reporting them to state regulators - conduct calculated to gain regulatory approval for excessively hiking malpractice premiums. According to the Foundation for Taxpayer and Consumer Rights the claims of the insurance industry that losses from malpractice suits are forcing them to jack up malpractice premiums ignores reality. The losses reported by insurance companies to state regulators to justify rates are actually much larger than the losses paid out. During a 9 year study from 1986 to 1994 the industry reported to regulators losses of $39.6 billion but actually paid only $26.7 billion. The losses were overstated by approximately 50% over the nine year period. (The study examines a period ending 10 years ago because it takes almost a decade to compare losses insurers report to regulators with the amounts actually paid out after malpractice claims have made their way through the court system -- a process that can take nine or 10 years.) About 190 medical malpractice insurance companies sell malpractice insurance and write about $9.4 billion in policies a year. The United States spends about $1.7 trillion on health care annually - so even with the inflated premiums - all malpractice costs are still less than 1% of annual healthcare expenditures. (Dean Starkman, Washington Post, December 29, 2005)