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The so-called insurance crises, such as the medical malpractice crisis, have been blamed on continually rising premiums due to runaway jury verdicts and awards to the injured. But the American Medical Association (AMA) surveys of self-employed physicians from 1970 to 2000 indicate that insurance premiums rose until 1986, then declined until 1996, rose thereafter, but were lower in 2000 than in 1986. There is no evidence that links the rise in premiums to an increase in payment of medical malpractice claims.
There is, however, evidence that supports a link between investment results by the insurance companies and the premiums they charge their physician customers. A report of this comprehensive survey may be found at 25 Health Affairs 750 (2006).
The same must be true for automobile insurance rates, homeowners insurance rates, etc. Insurance companies increase their rates primarily to make up for investment losses. Not to make up for casualty losses that they predict before they ever set their premium price or sell a policy. After all, insurance companies are in the business of accurately calculating their worst potential losses, and they do this based on decades of industry and national statistics. Before they ever issue a policy, they know where to set the premium price to assure a profit. What they don’t know, is how their investments of those premium dollars are going to perform.
So don’t buy the insurance companies’ cries of “wolf!” that always translate into taking away more of your legal rights.