Malpractice premiums: Soaring again

Average rates for internists are up nearly 25 percent, with more increases likely for next year.

By Berkeley Rice
Senior Editor

The malpractice mess just keeps getting worse. Some internists in Miami are paying $56,000 in professional liability premiums this year. And more rate hikes are on the way.

Average rates for internists nationwide jumped nearly 25 percent in the 12 months ending in July 2002, according to a recent comprehensive survey conducted by Medical Liability Monitor, a newsletter that covers the malpractice insurance industry. (The year before, rates rose an average 10 percent.) In some areas, rates are up nearly 100 percent.

Although the average premium for internists nationwide is just over $12,000, in big cities, rates run much higher: close to $46,000 in Detroit, $32,000 in Chicago, and in the low-20s in Cleveland, Las Vegas, and Los Angeles. Some suburban physicians are feeling the sting as well. Internists on Long Island, NY, pay more than $21,000—a higher tab than their peers in New York City.

But if the dollar amounts are staggering in big cities, the rate hikes may be most dramatic in some rural states: 99 percent in Mississippi, 90 percent in Arkansas, 50 percent in New Hampshire, and 36 percent in Tennessee. Internists in Texas' rural Rio Grande Valley are paying more than $26,000—more than some colleagues in Dallas and Houston.

What's causing the rise in premiums? Liability carriers have been hit by an increasing number of huge jury awards, rising reinsurance rates since 9/11, and declining returns on investment due to the stock market slump. As a result, a number of companies have left the malpractice market; others have scaled back their operations and are no longer writing out-of-state coverage. Many carriers have also become more selective, and are imposing stricter underwriting standards.

"Physicians who lost their insurers have had to scramble for replacement coverage," says Carol Brierly Golin, MLM editor. "And when they do find it, the prices are often much higher than their previous premiums." Insurers told MLM they believe prices will continue to climb into 2003.

Where internists pay the highest and lowest rates¹

N.A.: not available.

¹Except when otherwise noted, rates are for mature claims-made policies offered by various carriers for $1 million/$3 million coverage as of July 1, 2002. ²For $1 million/$4 million. ³Indiana rates are for $250,000/$750,000. Doctors pay a surcharge for $750,000/$1.25 million in coverage from the state's excess liability fund.⁴Kansas rates are for $200,000/$600,000. Doctors pay an 18 to 20% surcharge to a state fund for excess coverage. ⁵Louisiana rates are for $100,000/$400,000. Doctors pay a 57 to 65% surcharge to a state fund for excess coverage. ⁶Nebraska rates are for $200,000/$600,000. Doctors pay a 35% surcharge to a state fund for excess coverage. ⁷New Mexico rates are for $200,000/$600,000. Doctors pay an 87% surcharge to a state fund for excess coverage. ⁸Pennsylvania rates are for $500,000/$1.5 million. Doctors pay a 51 to 68% surcharge for $400,000/$1.2 million in excess coverage from a state fund. ⁹South Carolina rates are for $200,000/$600,000 in primary coverage, and include a $3,207 surcharge for unlimited occurrence coverage provided by the state. ¹⁰Wisconsin doctors pay a $1,500 to $9,000 surcharge to a state fund for excess coverage.

All figures are based on the 2002 Rate Survey published by Medical Liability Monitor. Rates do not reflect discounts, dividends, or other factors that may reduce or offset increases, nor do they include surcharges imposed due to recent claims or other underwriting factors. This chart lists rates only for companies that responded to MLM's survey. Copies of the full report are available from MLM by phone at 312-944-7900, by fax at 312-944-8845, or by e-mail at cptmdgolin@aol.com.

 

Berkeley Rice. Malpractice premiums: Soaring again. Medical Economics Dec. 9, 2002;79:51.