Understanding medical malpractice insurance: a primer.

Abstract

As the policy debate over the medical malpractice insurance crisis continues, dueling claims about its causes and suggestions for policy solutions have highlighted the need for a better understanding of how medical malpractice insurance works, why premiums change and what can be done about it. This primer on malpractice insurance discusses these issues and also analyzes the causes of and potential solutions to address malpractice crises. Key issues include: Rate regulation may have an important influence on insurance prices, but whether it raises or lowers them is not clear. Rising claims costs driven by an increase in average payments not claims frequency have contributed to rising premiums, but do not explain the sudden spike in premiums around 1999-2000. Along with claims costs, the insurance cycle has contributed to the current crisis.