Liability insurance forecast sees double-digit hikes ahead

Experiences continue to vary by state, and some hikes will be less steep than last year. But one thing is certain: Rates aren't going down.

By Tanya Albert, AMNews staff. Aug. 25, 2003.

Physicians anxiously awaiting the arrival of their medical liability insurance bills should brace themselves for another increase this year.

But there may be a little good news, for some, in the size of the increase.

Generally speaking, increases shouldn't be quite as dramatic as they have been in the past couple of years when some companies hiked rates by 100% or more. Still, there are areas and specialties that may be hard hit and increases in some of the most stable climates are expected to be in the double digits again this year.

"There are carriers in the market that are likely still underpriced," Physician Insurers Assn. of America President Larry Smarr said. "And because claims values continue to grow, we can expect rates to increase."

Physicians nationwide say that an out-of-control legal system has lead to large increases in their liability insurance premiums and has forced some insurance carriers out of the market. Trial lawyers disagree. They blame lower interest rates, a downward turn in the stock market and other non-courtroom factors for the current liability insurance environment.

The gravity of the situation, however, is indisputable. Nineteen states, according to the AMA, have reached crisis stage. Physicians, who are already financially squeezed by declining Medicare payment and insurance reimbursement, are retiring early, discontinuing high-risk procedures or leaving the state to practice elsewhere when insurance becomes either unavailable or unaffordable.