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Lawsuit Changes Don’t Help Patients

News Release from Americans for Insurance Reform
For Immediate Release

June 2, 2003

Contact: Joanne Doroshow, 917/438-4620


Time Magazine’s June 2, 2003, cover story, “The Doctor is Out,” contains breaking news confirming what consumer advocates have been saying for years: caps on malpractice damage awards will not result in lower malpractice insurance premiums.

According to Time (“A Chastened Insurer”), a study to be published this week by Weiss Ratings, an independent insurance-rating agency in Palm Beach Gardens, Florida, found that between 1991 and 2002, states with caps on noneconomic damage awards saw median doctors malpractice insurance premiums rise 48% — a greater increase than in states without caps. In states without caps, median premiums increased only 36%. Moreover, according to Weiss, “median 2002 premiums were about the same” whether or not a state capped damage awards.

Time reports, “Weiss found nine states with flat or declining premiums; two of them had caps, seven didn’t. Weiss speculates that regulation of premium increases made the difference [emphasis added]. In California, consumer groups argue that the state’s tough oversight of the insurance industry, not its caps on damages, explains why rates have grown more slowly.

“Moreover, said Time, “caps on noneconomic damages may not hold down doctors’ insurance costs, but they have boosted insurers’ profits.. ‘The caps are great for insurers,'” Weiss said.

According to Americans for Insurance Reform spokesperson Joanne Doroshow, “Weiss Ratings, as reported today by Time Magazine, confirms that today’s liability insurance crisis for doctors is not caused by jury verdicts or the legal system. It is driven by the insurance industry’s economic cycle that takes advantage of a weakened economy to price-gouge doctors and make huge profits. The remedy pushed by the insurance industry and organized medicine, limiting compensation to injured patients, failed in the past to solve doctor’s insurance problems. It will fail again. Only effective reforms of the insurance industry will work.”

Americans for Insurance Reform today released two additional fact sheets confirming Time’s report: statements by insurance industry insiders that so-called “tort reform” will not lower rates, and that the causes of sudden rate hikes are the cyclical business practices of the insurance industry. These can be found at:

Americans for Insurance Reform is a coalition of over 100 public interest groups from around the country that advocates stronger regulation of the insurance industry to solve periodic insurance “crises,” instead of limiting the legal rights of those who are injured.