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The Myths Behind the Rising Costs of Malpractice Insurance


It is common knowledge that the cost of medical malpractice insurance across the nation climbed steadily in recent years. In higher cost states like Florida, for example, a doctor of internal medicine probably pays over $56,000 each year in malpractice insurance premiums.

What is less commonly acknowledged are the driving forces behind these escalating costs. Many are quick to blame large medical malpractice verdicts for the inflation of malpractice premiums.

But the truth of the matter is not quite so simple.

A few years ago, The Synthesis Project, which is an initiative of the Robert Wood Johnson Foundation, released a report called Understanding medical malpractice insurance: A primer.

This report found several liability insurance market factors that affected malpractice insurance costs, including:

  • The exit of some commercial carriers from the market
  • Problems that cropped up following September 11, 2001, that drove up the costs of reinsurance
  • The growing popularity of hospital self-insurance and of hospitals buying insurance for doctors
  • A shift away from occurrence policies to claims-made ones
  • The popularity of joint underwriting associations
  • Poor investments

Not only does the increase in malpractice claims not appear on the list of contributing factors to increased malpractice insurance premiums, the study actually found it had no bearing on insurance costs whatsoever.

The report also points out medical malpractice insurers set their premiums differently than other insurance carriers. Malpractice premiums are priced based on the specialty of the physician, not their claim history.

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