Analyzes the causes of the recent dramatic increase in malpractice insurance rates and contraction of the market in risk spreading, exemplified by the withdrawal of commercial carriers from some states, the growth of physician-owned mutuals, and the switch from an occurrence to a claims made policy form. Some of these institutional changes appear consistent with an efficient market response to the changed nature of the risk involved in writing malpractice insurance--in particular, increased frequency and severity of claims, instability of the sociolegal environment, depletion of insurers' net worth, and lower mean and higher variance of return on reserves. Total withdrawal of commercial carriers can only be explained by regulatory control of rates and reserve requirements, exacerbated by medical society resistance to selective underwriting, deductibles, and experience rating. 38 pp. Bibliog.
This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.
Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/research-integrity.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.