This three-part project will analyze the structure and workings of the medical malpractice insurance industry, particularly with regard to pricing and its interactions with reforms in the medical-legal system. It will provide valuable information for researchers and policy makers, information that is now sorely lacking as the health care system wrestles with the second liability crises in a decade. Part 1 will analyze the """"""""industrial organization"""""""" of the industry, its structure and competitiveness, as well as its fiscal results. Pricing will receive special attention in light of loss trends, returns on reserves, and the ebb and flow of capacity in primary insurance and reinsurance. Both descriptive and quantitative approaches will be used, drawing upon reported financial date, published and unpublished literature, and executive interviews. Part 2 will consider the causes and effects of tort reforms. Causes include social-cultural, medical, legal, and insurance trends in malpractice and other lines. Results will be measured in terms of insurance premiums, claims frequency and severity, and jury verdicts. The principal statistical method will be multiple regression analysis, using improved specifications of the legal reforms, premium data, claims information, and jury verdict reports. Part 3 will consider one very significant proposed reform, namely insurance rating designed to improve quality incentives to physicians. Simple tabulations, regression analysis, and other techniques will test the hypothesis that the current system insufficiently predicts experience by rating class and will model different approaches, notably rating by hospital or hospital department, so as to encourage peer review. Data include over ten years of premium and claims data from the state of Florida. Overall, the project will write one book (part 1) and five articles (part 2 and 3).
