Joanne Doroshow, executive director for the Center for Justice and Democracy in New York, said the insurance industry must be monitored to stop the large swings in insurance premiums.
“Medical malpractice premiums are invested in bonds,” she said. “The companies make lots of money off of the investments because they have a lot of time to use the money.”
Doroshow explained that from the time a premium is paid and a settlement in a lawsuit is reached could be up to five years. “That is a long time to use the money.”
And that is only if the money is needed to settle a lawsuit.
When the economy is good, Doroshow said, the rates are kept low because of increased competition. “In a hard market, when interest rates decrease, and income decreases, rates go up. Then the weaker companies pull out altogether.”
…
Whether the market is soft or hard, Doroshow said she favors some type of control over rates insurers can charge. “In California, there is a law requiring a hearing if rates go up or down 15 percent.”
Most states, she said, have weak laws governing rate changes, and most insurance departments are too understaffed and underfinanced to keep tabs on them.
Rendell's plan calls for requiring a hearing if insurers want to raise or lower premiums 25 percent.
For a copy of the complete article, contact CJ&D.
The Center for Justice & Democracy is the only national consumer organization in the country exclusively dedicated to protecting our civil justice system. If you'd like more information, please contact us.
