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January 06, 2006

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Donna

"The Foundation for Taxpayer and Consumer Rights (FTCR), a California-based advocacy group, found that from 1986 to 1994 the insurance industry reported to regulators losses of $39.6 billion from malpractice suits, but actually paid only $26.7 billion, 31 percent less. The losses were overstated in each of the nine years. The estimates were then used to jack up malpractice insurance rates"

We've seen "studies" like this in several states, and analysis of these types of studies, which are sent out by organizations which generally have ties with lawyer-friendly Ralph Nader's Public Citizen and the many other groups his organization support, ignore several important data sets in compiling their indictments of medical liability insurers.

The most important number they always ignore is administrative expenses - which include defense costs for every single doctor insured by that company who is named in a lawsuit. Although 70% of medical liability suits end with no payment to the plaintiff, there's an average $25,000 price tag for defending every doctor named in those suits - and we know how rare it is for only ONE doctor to be sued.

When a case goes to court, the doctor "wins" 81% of the time, although "wins" is a relative term, since the doctor NEVER truly wins....but even when the jury finds that the doctor did nothing wrong - 81% of the time - it costs around $85,000 in defense.

Since only 46% of premium dollars actually go into the wallets of plaintiffs, that leaves 54% to cover plaintiff and defense lawyers' fees and administrative costs. So ANY analysis which doesn't take that portion of medical liability insurer expenditure into consideration when analyzing "profitability," generally for the express purpose of redirecting attention away from how much money is wasted in the legal system, is either incomplete or deliberately misleading.

Matt

Donna,

In your indictment of missing statistics, you forget one thing. Many of these "administrative costs" you complain of would still exist regardless, because they include the salaries of adjusters, exec salaries, the cost of the buildings the insurers are located in, etc.

When the insurers are willing to lay bare all their financial information to the public, rather than just selected information lobbyists like yourself, then perhaps we can have an honest discussion. As it is, all we can go off now are what those states with strong consumer oriented insurance commissioners drag out of them. And that information almost NEVER supports any of their, and your, claims.

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