Santa Monica, CA -- The company running South Carolina's largest medical malpractice insurer stated that "our data is just not adequate" to guarantee that a cap on non-economic damages would lower doctors' malpractice premiums. The company joins the growing ranks of insurers that privately admit the failure of malpractice caps but continue to push publicly for their passage.
Marsh USA executive, Timothy Ward, answered the questions of the Senate Judiciary Committee Chair on the impact of a non-economic damage cap on JUA, the South Carolina Joint Underwriting Association that covers 80% of the state's doctors, and PCF, the Patients' Compensation Fund. He did not determine any premium savings for doctors with JUA, writing: "The impact on the JUA rating structure is much more difficult to determine. Our impact would be primarily in the reduction of legal expenses and potentially lower frequency."
Ward questioned the likelihood of a PCF rate reduction as well, stating: "potential PCF rate reduction of 7% with a $250,000 cap'These are predictions based on assumptions that we do not know to be factual. I hesitate to make any statements in this area, as our data is just not adequate."
Read the Marsh USA letter.
"Marsh USA is the third malpractice insurer in as many years to break industry silence and admit that damage caps don't help doctors. It's time lawmakers stop swallowing industry lies and implement strong rate regulation and insurance reform -- the only proven way to bring down malpractice premiums," said Carmen Balber, consumer advocate with the Foundation for Taxpayer and Consumer Rights.
The nation's largest medical malpractice insurer, GE Medical Protective, and California's second largest, SCPIE Indemnity, made similar admissions that malpractice damage caps do not lower premiums when asked to measure the impact of caps by state regulators.
GE Medical Protective revealed in a 2004 filing to the Texas Department of Insurance that the state's non-economic damage cap would be responsible for no more than a 1% drop in losses. In testimony in a 2003 California Department of Insurance rate challenge a SCIPIE Indemnity vice president disclosed that the state's malpractice liability law, which imposes a damage cap and other legal restrictions on patients, does not substantially reduce risk for malpractice insurers in California.
An FTCR study shows how insurance reform, and not a malpractice damage cap, lowered insurance premiums for California doctors. The Medical Injury Compensation Reform Act imposed a damage cap in California in 1976. In the 13 years following its passage, malpractice premiums rose 450%. Insurance reform initiative Proposition 103 was passed in 1988 and successfully lowered doctors' premiums 20% within the first three years. FTCR has used Prop 103's protections to successfully challenge rate hike requests saving California doctors more than $50 million since 2004.