How profitable is medical malpractice insurance?
High medical malpractice insurance premiums charged to physicians have created the perception of a crisis. Some researchers have expressed the concern that medical malpractice insurance companies are making excessive profits. In this paper I compute the actual and allowable normal underwriting profit rates in medical malpractice, as well as in other liability lines, for six large insurance companies. These allowable, normal profit rates are then compared with actual profit rates to evaluate the relative profitability of each line of insurance. Data from 1978 through 1986 show that medical malpractice insurance ranked medium in underwriting profitability compared with other lines of insurance, and during 1985-86 it was the least profitable insurance business.
Hassan
M
M
Department of Health Services Administration, University of Alabama, Birmingham 35294.
D000206:Actuarial Analysis; D005069:Evaluation Studies as Topic; D005375:Financial Audit / Q000706:statistics & numerical data*; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D007343:Insurance Carriers / Q000191:economics*; D007346:Insurance, Accident / Q000191:economics; D007351:Insurance, Liability / Q000191:economics*; D015233:Models, Statistical; D013660:Taxes; D013997:Time Factors; D014481:United States; D014942:Workers' Compensation / Q000191:economics