Lawsuits Minute Factor in Calculating Malpractice Insurance Rates
Yet another study proving that skyrocketing malpractice insurance rates have only a tenuous relationship with malpractice lawsuits. The study, performed by the Foundation for Taxpayer and Consumer Rights, considered industry reported loses to actual payouts over a 8 year period from 1986 to 1994. The reported loses totalled nearly 40 billion, while the actual payouts were only 26.7 billion, a 31 percent difference. The insurance industry overstated their losses every year considered in the study.
Among other factors, insurers consider estimated losses when calculating premiums. The study shows that by overstating their losses, insurance companies can inflate their premiums well beyond what the market would otherwise support.
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