"We are well aware that opponents of reform will attempt to blame insurers for the current state of affairs," said Rodger Lawson, president of the Downers Grove, Ill.-based Alliance of American Insurers. "They've done it before."

However, Mr. Lawson noted, most commercial insurers have already left the medical liability market because of too many claims costs chasing too few dollars.

"Any objective analysis will demonstrate that physicians and hospitals have themselves been trying to manage this situation as best they can, but they, too, have reached a fork in the road," he said.

Lawrence Smarr, president of the Rockville, Md.-based Physician Insurers Association of America, which represents professional liability companies owned or operated by providers, said that the problem facing the nation today is a medical liability crisis, not a medical liability insurance crisis.

Both at the press conference and at a later Capitol Hill hearing on medical malpractice, Mr. Smarr dismissed accusations that insurance companies raised rates on medical malpractice not because of liability issues, but to recoup stock market losses.

In fact, he said, medical liability insurers are primarily invested in high-grade bonds and have not lost large amounts in the stock market.

Indeed, he said, PIAA statistics indicate that members have only about 11 percent of their portfolios invested in stocks, thus precluding major losses due to market swings.

The primary driver of medical malpractice insurance costs has been paid claim severity, Mr. Smarr said.

The mean payment amount has risen by a compound annual growth rate of 6.9 percent since 1988, compared with 2.6 percent for the Consumer Price Index, he said.

Moreover, Mr. Smarr said, payments exceeding $1 million now comprise almost eight percent of claims, doubling in four years.

"The unavoidable consequence is that physicians are moving away from crisis states, reducing the scope of their practices or leaving the practice of medicine altogether," Mr. Smarr said.

But at the hearing, former Missouri Insurance Commissioner Jay Angoff, now a lawyer in private practice, said investment income is a major reason for the malpractice insurance crisis.

He said that in Missouri, the number of claims actually decreased over the years 1993 to 1998, but malpractice insurance rates have been increasing.

One reason, he said, is that stocks have crashed and interest rates are near 40-year lows.

"The drop in insurers' investment income today can therefore dwarf the decrease in their claims payments, and thus create pressure to raise rates even though claims are going down," Mr. Angoff said.

At the same time, he said, reinsurance rates have been increasing due to the Sept. 11, 2001, terrorist attacks, even though terrorism is unrelated to medical malpractice.

Third, Mr. Angoff said, statutory accounting principles create incentives for insurance companies to inflate estimates of incurred losses.

Finally, he said, the industry's antitrust immunity under the McCarran-Ferguson Act allows insurance companies to collectively raise prices without fear of prosecution.

Legislation that would limit non-economic damage awards in medical malpractice cases to $250,000 has been introduced in the House of Representatives. The legislation is H.R. 5.