The medical-malpractice insurance line, which has performed dismally over the past few years, will become profitable again in 2006, a new study predicts.
The analysis by Conning Research and Consulting Inc. titled "Medical Malpractice: New Opportunities Emerging? Or the Eye of the Hurricane?" identified several favorable developments for its optimistic forecast. They include: declining frequency, rising investment income, and the progress in state reforms, particularly in states designated by the American Medical Association as "crisis states."
"While there are certainly reasons for concern, especially long- term, overall the news is good," commented Stephan Christiansen, director of research at Hartford, Conn.-based Conning Research & Consulting.
Mr. Christiansen observed: "While we have certainly been in the loss-and-crisis segment of the cycle for the past few years, we see clear indications of progress towards profitability."
The medical-malpractice insurance has been the focus of several recent studies that have argued that huge jury awards and settlements in med-mal cases around the country are not linked to rising malpractice coverage costs for doctors.
One new study, from Dartmouth College economics professor Amitabh Chandra, also found that over the past decade, malpractice premiums have only risen in step with increases in overall health care costs. Many physicians claim that overly-generous awards to plaintiffs in med-mal suits have been the main reason behind soaring malpractice premiums.
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