malpractice and health insurance premiums

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Tdub - 17 Jan 2006 20:57 GMT

A new study shows that the insurance industry overstates its
malpractice burden:
http://www.consumerwatchdog.org/malpractice/pr/?postId=5715

The Foundation for Taxpayer and Consumer Rights (FTCR) examined the
official filings that malpractice insurers submit to state insurance
commissioners and found that over a 9-year period, the amount insurers
reported they would pay out on policies was 46% more -- approximately
$12 billion - than what they actually did pay to victims.

The malpractice insurance industry grossly overstated its payouts every
year in the 9-year period FTCR examined, and in one year, overstated
payouts by 66%.

"By manipulating their books to misrepresent their 'losses', the
insurers have profited in two ways. First, they have used the inflated
numbers to justify rate increases that were unnecessary and excessive.
Second, they have invoked their exaggerated loss estimates to promote
legislation allowing these insurers to limit how much compensation they
have to pay out to victims of medical negligence," said FTCR's Harvey
Rosenfield.

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judamd@aol.com - 17 Jan 2006 21:12 GMT

This reminds me of an insurance agent who tried to convince me to get
an annuity through his company by telling me there was no way I could
lose my money because the company had over 5 billion dollars in assets
and wasn't about to go broke. He didn't mention that those assets are
the difference between what the company collects in premiums and what
it pays out in claims.
Dave Perry

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Steve Jordan - 17 Jan 2006 21:50 GMT

On January 17, Dave Perry wrote:

> This reminds me of an insurance agent who tried to convince me to get
> an annuity through his company by telling me there was no way I could
[quoted text clipped - 3 lines]
> it pays out in claims.
>

Plus investment income, which can be a major source of income. As a
matter of fact, an insurer can be a profitable business even when the
loss ratio is negative (losses paid>premiums collected).

The agent was not necessarily just blowing smoke. On the whole, the
annuity payments come out of investment income, not premiums.

Regards,

Steve J

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Steve Jordan - 17 Jan 2006 21:42 GMT

> A new study shows that the insurance industry overstates its
> malpractice burden:
> http://www.consumerwatchdog.org/malpractice/pr/?postId=5715
>

(ka-snip)

What is being reported (and misrepresented by this group of
self-appointed advocates) is loss *reserves*, not loss payments. But one
must read their press release carefully to discover that fact.

Also: it's the malpractice insurance subdivision of the insurance
business that is under attack here, not the industry as a whole.

Insurers are required by law to set aside loss reserves and to report
them to regulators. Loss reserves represent the insurers' *estimate *of
anticipated losses. Reserves must be set aside as an effort to insulate
claimants and insureds from the effects of insolvency of the insurers,
should it occur (and it does).

If the insurers are over-reserving, it has nothing like the effect on
insureds and claimants that *under*-reserving would. Think about it. And
reserves that are unspent to pay losses can be repaid into the general
funds of the insurers.

Well, insurers are an easy target for those with an agenda. Too bad that
they so often bring it upon themselves.

Hmm, I wonder where our Monitor of Topicality is.....

;-)

Regards,

Steve J

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juniper - 19 Jan 2006 05:48 GMT

> Hmm, I wonder where our Monitor of Topicality is.....

If I had the attention span of a gnat these days, I'd apply for this
job! I love the title!
Job Description: Reads newsgroups and assesses for Topicality. No
action needed, just assessment skills. Applicants Lacking Mental Floss
Need Not Apply.
LOL.

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