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Implications of Lower Medical Malpractice Insurance Premiums

Maria Palma

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For many years medical professionals have been grumbling over the high costs of malpractice insurance, but a new report reveals that premiums are on the decline.

The Medical Liability Monitor, a resource that has been covering the medical professional liability insurance market since 1975, published their 2014 Annual Rate Survey, which says that professional liability insurance is on the decline. Although the majority of rates for medical professionals remained the same compared to 2013, specialists such as internal medicine physicians, general surgeons, and OB/Gyns saw their premiums decrease by as much as 1.7 percent.

So what do these lower malpractice insurance premiums mean? There are several ways we can look at it. First, these declines rates could mean that there is more competition in the insurance marketplace. Healthcare professionals have more choices available, so providers are more inclined to offer lower premiums. States like Michigan have a variety of carriers that 75% of providers in the state, and no carrier in particular has a dominant market share.

Another implication of lower malpractice insurance premiums is the decline of malpractice claims. Contrary to popular belief, malpractice payouts have actually decreased and only comprise about 2% of healthcare costs in the U. S. According to Diederich Healthcare’s “2013 Medical Malpractice Payout Analysis”, payouts were $3.6 billion in 2012, which was 3.4 percent lower than the previous year.

For medical professionals, lower malpractice insurance rates eases some of the financial burden, especially for independent physicians who have their own practice. Also, other doctors who have contemplated moving to another state because of high premiums may be able to stay put.

Malpractice insurance carriers base their rates on a number of factors, which includes the claims history of a region. How often are medical professionals held liable, and how big are the settlements? Some rates can be as low as a few thousand dollars for physicians while specialty doctors such as obstetrician/gynecologists can see premiums as high as $200,000 or more.

It’s hard to predict whether malpractice premiums will continue to decline, or if they’ll spike up again in the future. Regardless of what is happening in the marketplace, medical professionals can always do a number of things to help lower their premiums such as taking a risk management course, getting board certified, or continuously shopping around for the right policy at more affordable rates. Also, if a doctor has been claims-free for at least five years, some carriers will offer a discount.

Find out more about ways to reduce malpractice insurance premiums by visiting:


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