Medical Malpractice Insurance
Property and Casualty Insurance (C) Committee
NAIC efforts regarding this issue have been to review regulatory and legislative solutions to be considered in response to a market crisis in availability and affordability of medical liability insurance. Data limitations preclude detailed analysis by specialty or individual location. Additionally, the scope is limited to the analysis of claim losses as a major contributor to premium instability and availability problems.
Of primary concern when studying the issue of medical malpractice, is the inconsistent, incomplete, difficult to obtain (and interpret) nature of the data. Much of the NAICs conclusions and recommendations are in agreement with those contained in the study released in 2003 by the GAO. Namely that state insurance regulators should identify the types of data that are necessary to properly evaluate the medical malpractice market—specifically, the frequency, severity and causes of losses—and begin collecting these data in a form that would allow appropriate analyses in the future.
For several years, the health care profession has struggled with a medical liability insurance crisis. The number of insurers offering this coverage has diminished while the cost of the coverage increased to the point where many health care providers feel that the increases are affecting the availability and affordability of adequate insurance coverage. The NAIC studies available data to survey the medical liability environment for crisis solutions that may be addressed and implemented through regulatory or legislative actions.
Interestingly, the medical liability insurance crisis varies dramatically among the states. Loss ratio statistics show that experienced losses can fluctuate wildly from year to year, and jurisdiction to jurisdiction. Companies writing this line of business tend to be regional or single-state insurers. According to the U.S. General Accounting Office (GAO), regionally oriented “physician-owned and/or operated insurers now cover 60 percent of the market.”
Because of the regional nature of the market, this study suggests that the legal and economic structures currently in place for both the medical profession and the insurance industry require a look at the states individually to gain meaningful perspective of the depth and breadth of the problems that have beset the medical malpractice insurance market over the past several years. There has been considerable speculation and a number of studies concerning the causes of the latest crisis in the medical liability insurance market. NAIC efforts identify many factors that have contributed to the current market conditions. Some include: competitive pricing; increasing claims experience, including increasing health care costs, jury awards and defense and investigation costs; declining investment yields; loss reserve deficiencies; inadequate underwriting and loss control procedures; increasing reinsurance costs; and pressure to consolidate.
Research further indicates that while net investment income has declined, it is primarily, though not exclusively, underwriting losses driving rate increases experienced by physicians and other health care providers. As a result, ongoing study focuses on incurred losses.
The Statistical Information (C) Task Force was charged in 2005 to identify sources of medical malpractice data and the steps required to capture data. To that end, they conducted a survey of states who submitted copies of medical malpractice reports compiled by departments, along with any medical malpractice data reporting forms being used. These reports, or links to them, are linked to the Statistical Information (C) Task Force page. This page also links to various other entities that collect medical malpractice data either on a regular or ad hoc basis. Samples or links to samples of these various types of medical malpractice data are also posted on this page.
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