Malpractice Reform: A Bitter Pill for Victims
Portland Press Herald (Maine)
June 1, 2003


While liability premiums are certainly rising in about a dozen states, in-depth studies by USA Today and Americans for Insurance Reform (AIR) indicate conclusively that average jury awards, statistically flat since 1990, are not a significant contributing factor. Rather, the problem lies in the foolish financial strategies of the medical-malpractice insurance firms, which routinely invest collected premiums in what has become a casino stock market, in order to add to their profits.

Throughout the booming 1990s, insurers made 10 percent or more on their investments; last year, they lost money or earned less than 2 percent. Their answer: Raise rates. Or, as major insurer The St. Paul Companies has done, drop malpractice coverage, lobby for tort reform, contribute to the GOP, and wait for a government cap on lawsuit damages before re-entering the market. The problem for the insured: Those rising malpractice rates are not adequately regulated by the states, which are theoretically responsible for insurance oversight. AIR, a coalition of nearly 100 consumer groups, offers a sensible three-part solution:

More meaningful insurance disclosure laws;

Stronger control over insurance rates by state commissions;

Prevention of monopoly pricing by repeal of the insurance industry's federal antitrust exemption under the 1945 McCarran-Ferguson Act.

…

The current liability-insurance "crisis" is the third of the past 30 years, following others that arose in the mid-1970s and mid-1980s.

For a copy of the complete article, contact AIR.