“Medical-malpractice insurance underwriters in Pennsylvania lost $18 million last year, according to a new analysis by the state Department of Insurance that appears to underscore industry claims that Pennsylvania’s tort system is driving insurers out of the state. … Medical-malpractice insurance underwriters in Pennsylvania paid out $345.4 million in claims last year, about 31 percent less than the $499 million that insurers received in premiums from doctors, the department said. But while insurers earned $46.4 million in investment income, they also paid $136.9 million in legal costs and $81.1 million for taxes and other operating expenses.” The actual loss figure attributable to 2002 may come in a good bit higher than $18 million when all accounts finally come to reckoning: “The insurers also put away $209.4 million in reserves for future claims.” (Marc Levy, “State analysis shows Pa. malpractice insurers lost $18M last year”, AP/Doylestown (Pa.) Intelligencer, Jul. 15).
More: reader James Ingram writes, “So what do these numbers show? Insurers collected $499 mm in premiums and paid $345 mm in claims and $137 mm in legal costs. If we assume that 1/3 of the amount paid in claims went to plaintiffs’ lawyers (actually a pretty conservative figure, many charge more) that amounts to another $115 mm going to legal costs. Add $137 mm and $115 mm and you have $252 mm of the $499 mm that doctors, hospitals and other providers paid in premiums (more than half) going to legal expense while a maximum of $230 mm (46%) went to claimants. Great system, if you are a lawyer!”
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