Insurers And The Medical Community Admit Tort Reform Doesn’t Reduce Premiums

Stricter tort laws will not result in lower malpractice premiums.  The fact that “tort reforms” do not work has been demonstrated in states like California and admitted to by the insurance industry.  The American Insurance Association (AIA) said that lawmakers who enact “tort reform” should not expect insurance rates to drop.  Specifically, a March 13, 2002, AIA press release leads with an astounding pronouncement: “[T]he insurance industry never promised that tort reform would achieve specific premium savings.”

 Donald J. Zuck, Chief Executive of Scpie Holdings, Inc., a leading malpractice insurer in California, told the Wall Street Journal: “I don’t like to hear insurance-company executives say it’s the tort system – it’s self-inflicted.”19] 

In the current debate, no insurance spokesperson will agree to premium reductions if damages caps are instituted.  Indeed, they acknowledge damages caps won’t reduce premiums.  American Tort Reform Association (ATRA) President Sherman Joyce told Liability Week that: “we wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates.”[20]

And, according to Victor Schwartz, General Counsel of ATRA:“many tort reform advocates do not contend that restricting litigation will lower insurance rates, and I’ve never said that in 30 years.”[21]

The Center for Justice & Democracy recently completed an exhaustive study of the relationship between “tort reform” and malpractice premiums.  They concluded that “tort reform” has historically had no impact on insurance rates.[22] 

Locally, John Henry, CEO of Emory Hospitals, including Emory University Hospital and Crawford Long Hospital told the Atlanta Business Chronicle that: “what is happening to us is more than just malpractice insurance.  Directors’ and officers’ liability insurance has gone through the roof, insurance on buildings has gone up.  There does not seem to be any direct relationship between claims and premium increases; it seems more related to Sept. 11 and the need for insurance companies to generate profits for shareholders.”[23]

According to the Wall Street Journal, “[s]ome doctors are beginning to acknowledge that the conventional focus on jury awards deflects attention from the insurance industry’s behavior. The American College of Obstetricians and Gynecologists, for the first time is conceding that carrier’s business practices have contributed to the current problem, says Alice Kirkman, a spokesperson for the professional group:“[W]e are admitting it’s much more of a complex problem than we have previously talked about,’ she says.”[24]

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