Americans for Insurance Reform recently published two studies of the medical malpractice insurance industry. These studies show that malpractice premiums and claims made are at the lowest levels in four decades. The study further shows that legislative enactments such as damage caps have played no role in the drops in premiums and claims.
The periodic premium spikes experienced in the past were unrelated to any alleged “malpractice crisis” but rather to changes in the economic cycle of malpractice insurers and decreases in the insurance companies’ investment portfolios. When the insurance companies suffer investment losses during they attempt to make up the loss in profit by increasing rates on their insured physicians.
This holds true even in states like Texas that have passed stringent caps on the recovery of damages by victims of medical negligence. In fact, states without limits on the recovery of damages experienced a greater decline in premiums (29%) than those that did pass limits on victims’ rights (22%).
These damage caps serve only to increase the profits of insurance industry while trampling on the constitutional rights of everyday citizens.