Why Is The Medical Malpractice Market Softening?

RUNNING HEAD : Medical Malpractice

Why Is The Medical Malpractice Market Softening (Name (Professor 's Name (Course

Why Is The Medical Malpractice Market Softening

Medical malpractice claims , the legal remedy for medical negligence serve the three goals of maintaining or controlling the quality of professional health care , compensate for harm and vindicate for emotional distress "medical jurisprudence " Britannica 14 . As protection against such liability claims , medical malpractice insurance includes coverage for doctors and other professionals in the field of medicine or health care (Medical Malpractice ? 1

Recent trends in the medical

malpractice market point to a shift towards softening in terms of lower rates and wider insurance terms (2006 17 This contrasts with the period of rising prices that began at the turn of the century during what has been dubbed as the recent medical malpractice crises , following a time of basically flat rates (there had been previous industry crises , in the mid 70s and mid 80s . Today , there is increasing recognition of the softening of the primary medical malpractice market (2007 16

While the explanations behind the softer medical malpractice market are subject to debate , the following factors have been suggested

The phenomenon of insurance cycles of soft-market and hard-market periods that reflect forecasting errors of insurers (Primer 14 Characteristic of soft-market cycles , the current trends point to relatively low rates , ample supply (of products as well as players ) and possibly , loosened or lower underwriting standards

The developments in state-level medical malpractice legislation . To counter rising medical-malpractice insurance premiums , several states took bold legislative moves . About a dozen states that included Florida and Nevada passed malpractice-relief bills , placed ceilings on damage awards (non-economic ) or adopted comprehensive plans to minimize lawsuits "United States , Britannica 13

A possible cause could be the fact that in general , the medical malpractice market seems to be moving out of the crisis and into a period of equilibrium . According to Guy Carpenter Company , five years of rate hikes , reserve strengthening and re-underwriting activities led to "improved industry underwriting results " and the presence of new capital from both the insurance and reinsurance players (2006 17

Another possible reason is the enactment of programs by several states to aid in the purchase of insurance coverage for medical professionals (Medical Malpractice "State-Run Programs

Based on the study by Conning Research Consulting Inc , another factor could be the series of premium hikes over a four-year period that allowed insurance companies to recuperate their previous losses (Medical Malpractice ? 7

Herein , it should be pointed out that while malpractice insurance rates has decreased or stabilized in most areas in the country , the rates are actually still higher than they were at the start of the decade

It should be noted , however , that a study released by the Americans for Insurance Reform (AIR ) in 2006 indeed showed a wholesale decrease in medical malpractice insurance premium regardless of whether or not the states passed limits on compensation or restrictions on the legal rights of patients . It seems that the decline in insurance rates does...