You are simply incorrect as regards the association of higher malpractice premiums with lower stock market returns. As evidence, I offer Oklahoma, where the only major malpractice insurer (PLICO) is owned by the state medical association. Investment policy is extremely conservative; the company's portfolio has been entirely medium and long term bonds, which have done very well over the 22 year history of the company. PLICO is, needless to say, non-profit, and premiums have been held to the minimum necessary to ensure solvency and adequate risk margins.
The company's financial position, however, has gone from rock-solid to near-bankrupt in the last four years, in spite of premium increases ranging from 28% to 50% per year in that period of time. Some physicians have left the state, and those with marginal or part-time practices have been forced out of business. Oklahoma, due to the efforts of a strict medical licensing authority and juries with good sense, had largely been spared the onslaught of the malpractice mess until recently; now it is here in full force.
The malpractice crisis is multifactorial; it is no exaggeration, however, to say that it is real, and not a boogie man born of the insurance companies' need to recoup their investment losses. That contention is a false, though favorite, canard of the trial lawyers, who run the state legislature and have blocked repeatedly any effort at tort reform. |
