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Medical Malpractice Insurance Industry Not Responding to Caps, Claims Study

In an attempt to battle skyrocketing medical malpractice insurance premiums, legislators in a number of states have begun to mandate caps on the amount of money that can be awarded for non-economic damages, such as pain and suffering, arising from medical malpractice. The caps are intended to end “excessive jury awards” to malpractice victims, thus lowering the payout by medical malpractice insurance companies, in turn preventing insurance premiums from climbing to the point where doctors can no longer afford to insure themselves. However, according to a recent study by Weiss Ratings, Inc., a leading provider of ratings and analyses of financial companies and stocks, this is not what happens.While the caps do accomplish their intended purpose of lowering the average amount medical malpractice companies must pay out, insurers continue to increase their premiums at a rapid rate, regardless of caps. In fact, doctors in states with caps were charged a larger increase than those in states where caps were not mandated. The Weiss report suggested that the focus on tort reform has prevented legislators and the public from examining other factors contributing to the increase in premiums, such as rising health costs and imprudent business policies of the medical malpractice insurance community. The Weiss white paper indicates that insurancecompanies use the caps to divert attention from long years of mismanagement that allowed marketing strategy to take precedence over actuarial prudence.

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