Drs Insurance premiums increase because of market cycles, not malpractice claims

The New York Times is reaffirming the obvious: malpractice law suits are not the root-cause of higher insurance premiums for doctors. Instead, "the more important factors appear to be the declining investment earnings of insurance companies and the changing nature of competition in the industry."

In the late 1990s, insurers discovered that they had dropped prices below the cost of paying claims. Companies "had to raise prices or go out of business...In 2000, about the same time that under-pricing and other market conditions began to push up prices in medical malpractice, the much larger world of commercial insurance was also going through a cycle of higher prices...the cyclical nature of the insurance business and a drop in insurers' investment earnings when markets fell had been among the strongest forces behind the rise in medical malpractice premiums."

As for 'frivolous lawsuits'--

• In 2004, payments for malpractice claims against doctors and medical professionals fell 8.9%.
• The total paid out by insurance companies for claims against doctors and medical professionals rose 3.1% between 1993 and 2003 and then declined last year.
• In 2004, the average payment for malpractice fell to $262,486 and the number of payments made for medical malpractice cases dropped to 17,696 from 18,996 in 2003