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Casualty Actuaries in Reinsurance. Observations on Medical Malpractice. This document is incomplete without the accompanying discussion; it is confidential and intended solely for the information and benefit of the immediate recipient hereof. Observations on Medical Malpractice.

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Casualty actuaries in reinsurance

Casualty Actuaries in Reinsurance

Observations on Medical Malpractice

James D. Hurley, ACAS, MAAA

This document is incomplete without the accompanying discussion; it is confidential and intended solely for the information and benefit of the immediate recipient hereof.


Observations on medical malpractice
Observations on Medical Malpractice

  • Financial results

  • Data/Analytical issues

  • Tort reform


Observations on medical malpractice1
Observations on Medical Malpractice

  • Financial results impacted by...

    • 1990’s

      • modest loss trends

      • favorable reserve development

      • relatively high investment returns

      • expansion

      • slippage in pricing

    • 2000’s

      • loss trends pick up

      • unfavorable reserve development

      • investment returns turn

      • rates adjusted


Combined ratios
Combined Ratios

Source: AM Best, RAA



Observations on medical malpractice2
Observations on Medical Malpractice

  • Financial results impacted by...

    • 1990’s

      • modest loss trends

      • favorable reserve development

      • relatively high investment returns

      • expansion

      • slippage in pricing

    • 2000’s

      • loss trends pick up

      • unfavorable reserve development

      • investment returns turn

      • rates adjusted

    • ... a work in progress?


Observations on medical malpractice3
Observations on Medical Malpractice

  • Data/Analytical issues

    • Jurisdictions

    • Limits/Clash

    • Review ALAE/Indemnity combined and separately?

    • Sources

      • company data

      • JVR


Medical malpractice jury awards
Medical Malpractice – Jury Awards

Source: Jury Verdict Research


Observations on medical malpractice4
Observations on Medical Malpractice

  • Data/Analytical issues

    • Jurisdictions

    • Limits/Clash

    • Review ALAE/Indemnity combined and separately?

    • Sources

      • company data

      • JVR

      • National Practitioner Data Bank

      • state specific data sets

    • Experience vs. expected ILF’s


Observations on medical malpractice5
Observations on Medical Malpractice

  • Tort reform

    • Background – Federal

      • HR5/HR4280

      • MICRA-like

    • Background – State

      • many have discussed

      • several have passed

      • likely impacts


Observations on medical malpractice6
Observations on Medical Malpractice

  • Tort reform (cont’d)

    • Issues/Risks

      • limited data to evaluate

      • prospective credit?

      • interpreted as expected

      • upheld

      • specifics

        • non-economic limit: per defendant or per occurrence

        • collateral source: jury disclosure or after award

        • panels: admissible or not

        • PCF, etc.

        • no-fault


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