Why I pay Too Much for Healthcare

FTCR: Insurers Inflated Med-Mal Claims to Justify Rate Hikes

December 30, 2005

In documents filed with state regulators and in statements to public officials, medical malpractice insurance companies consistently inflated the amount they estimated they would pay out in claims, according to a study by the nonprofit Foundation for Taxpayer and Consumer Rights.

The report maintains that insurers then used the overstated figures to justify increases in doctors' premiums and pressure legislators to enact lawsuit restrictions.

The group charges that malpractice insurers inflated their losses by an average 46 percent each year between 1986 and 1994. During that period, insurers reported $39 billion in losses to regulators, but actually paid out only $27 billion in claims, according to the report.

FTCR called for an investigation of industry accounting practices that it said enable insurance companies to misrepresent their financial condition and charge potentially billions of dollars in excessive premiums.

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