From the September 2005 issue of Cortlandt Forum
The nation’s 15 largest malpractice insurance carriers took in three times as much in premiums last year as they paid out in claims. And over the past five years, their premiums have doubled while their payouts have remained flat, according to a newly released study.
“Doctors have been overcharged for several years,” said Jay Angoff, a former Missouri insurance commissioner who conducted the study, which was based on the insurance companies’ own data. “The numbers underscore the need for tougher oversight to prevent profiteering,” adds Richard Blumenthal, Connecticut attorney general, who joined Angoff at the New York City press conference where the study was presented.
Angoff contrasted his data with those used by insurance companies to justify rate increases or lobby for caps on malpractice awards. “Their figures are largely estimated or are unverifiable or both. They’ve been off by up to 40%,” he said. Angoff’s data come from either the companies’ annual reports or filings with state authorities — “figures that haven’t been comprehensively analyzed before,” Angoff says. The companies include AIG, HCI, The Doctors Company, American Physicians Capital, GE Medical Protective, and Continental Casualty.
Angoff found that several insurers increased their premiums even though their claims payments actually fell, in some cases substantially. ProNational and Medical Assurance, both affiliates of the ProAssurance Corporation, as well as the AIG affiliate Lexington Insurance, were among the worst offenders. Medical Assurance, for example, increased its premiums 89% in 2004 even though its payments decreased by a third. The company paid out only 10 cents in claims for each premium dollar collected. ProNational paid out 13 cents and Lexington 14 cents.
“Perhaps most striking,” said Angoff, “in 2004, these 15 insurers increased their earned premium by 9.3%, even though the amount they estimated they would pay out in the future declined by 21.1%.”
The 25-page study, Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry, is available from the Center for Justice & Democracy in New York City (www.centerjd/ANGOFFReport.pdf. Accessed August 15, 2005).