Why Are Malpractice Premiums So High — or So Low?

by Patricia Munch Danzon


Download eBook for Free

FormatFile SizeNotes
PDF file 2.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback56 pages $23.00 $18.40 20% Web Discount

An empirical analysis of malpractice premiums paid by physicians in 1976 shows that the huge range ($75 to over $50,000) reflects the multiplicative structure of rates. Rates are the product of state, specialty, and coverage differentials, which together account for roughly 60 percent of the total variation in premiums. This implies that the rating structure recommended by the Insurance Services Office is widely followed. In this sample, state differentials account for a smaller fraction of the total variance than specialty differentials. About half the total state effect can be attributed to differences in the frequency and severity of claims, presence of a discovery rule (an indicator of risk), and operation of medical society programs. Further research is necessary to determine how far this rigid structure of rates interferes with the efficient functioning of the tort system.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

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.