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Medical malpractice rates fall, but insurers are still profitable

Premium content from South Florida Business Journal by Brian Bandell

Date: Monday, October 18, 2010, 12:00am EDT - Last Modified: Thursday, October 14, 2010, 9:45am EDT
Brian Bandell

The crisis in Florida’s medical malpractice insurance system is taking more of a back seat, as rates declined for the sixth consecutive year.

According to the Florida Office of Insurance Regulation  ’s latest report, medical malpractice insurance carriers lowered rates by an average of 8.2 percent in 2009. The insurance companies were once again profitable, with a 7 percent return on premiums.

The market is so attractive that 10 insurers debuted in Florida last year – all but two of them from out of state.

That’s a big difference from 2003, when rates were doubling every year, prompting hundreds of doctors to drop coverage and “go bare.” Strict medical malpractice damage caps in 2003 and 2004 have helped reduce the liabilities faced by doctors and, many trial lawyers would argue, make many cases uneconomical to bring to court.

Yet, having access to more affordable coverage hasn’t inspired most doctors who have gone bare to sign up, said Steven Salman, CEO of Plantation-based medical malpractice insurer Healthcare Underwriters Group of Florida, which lowered rates 5 percent this year.

A lot of doctors who canceled insurance and went bare got comfortable with that and don’t see a need to purchase coverage, he said.

“It’s a theory many of them have that they won’t have a claim,” Salman said. “It works fine until it’s no longer true.”

He recounted the story of a Broward County family physician who recently lost a multimillion-dollar judgment and must pay $250,000 of that, or face losing his medical license.

State data shows that about 5,300 doctors have gone bare, representing about 15 percent of practicing physicians, said Matt Gracey, CEO of Delray Beach-based medical malpractice insurance brokerage Danna-Gracey. The rate is much higher in South Florida. Doctors in Miami-Dade County can expect to pay double the premium charged to doctors outside of the region because it has such a high number of claims, he added.

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