State: Insurers turning corner

JEFFERSON CITY, Mo. -- Medical malpractice insurance companies collected more in premiums in 2004 than they expect to pay out in claims for the first time in five years, the state Insurance Department says in a new report.

Still, average medical malpractice payouts in Missouri continued to rise last year, the agency said.

The agency's annual report warned that the numbers don't tell the whole story, estimating that up to 20 percent of medical malpractice claims are not reported. The department has little authority over those who self-insure, for example, so most their data is not included.

The report found that medical malpractice insurers had a positive underwriting in 2004 but did not take into account other factors affecting a company's profits, such as investment returns or federal taxes.

The agency found that overall claim payments increased in 2004 by 31.5 percent to $110.1 million, but incurred claims -- what an insurer expects to pay out in the future -- dropped by 39 percent. The agency said that shift is an indication that insurers expect things to improve down the road.

Calvin Call, executive director of the Missouri Insurance Coalition, said the positive result is a good sign but noted the report's scope is limited.

"The trend is that we are perhaps starting down the other side of the hill," Call said Wednesday.

He said that with a new state law limiting injury lawsuits, the trend could continue and insurance rates could begin to drop.

Premiums increased from $210.7 million to $243.4 million in 2004, while incurred losses -- claims that have been paid or are expected to be in the future -- fell from $189.5 million to $126.6 million, and other expenses also dropped, the report said.

"Finally, the amount of premium collected has caught up to the projected payout," Call said.

The overall average award per claim rose again in 2004, from $212,006 to $252,666, the agency said. However, the average payment for hospitals fell, from $195,034 to $177,740 last year.

New claims also fell by 20 percent in 2004, after an 11 percent drop in 2003. The peak came in 2000 at 1,986; last year, there were 1,379.

The cost to settle claims continues to be affected by outside factors such as the rising cost of health care, the increase in average wages and the severity of injuries, the report found.

The most reported medical errors that resulted in a malpractice payout involved surgery and diagnosis. About 26.5 percent of claims were related to surgery mistakes, while 24.4 percent of claims dealt with diagnosis. A doctor's failure to diagnose a condition was the most commonly reported mistake.

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On the Net:

Insurance Department: http://www.insurance.mo.gov