Rockville, MD – April 27, 2006 – Newly released expert research reveals that consumer groups’ criticisms of the medical malpractice insurance industry contain systematic flaws and the intentional misuse of industry data.

"This new research points out the gross manipulation and blatant misrepresentation employed by these personal injury lawyer-oriented groups in order to pursue their self-serving political agenda,” said Lawrence Smarr, president of the Physician Insurers Association of America.

“Pricing and Reserving Practices in Medical Malpractice Insurance,” authored by university insurance department chairs Robert E. Hoyt, PhD, and Lawrence S. Powell, PhD, soundly rebuts a December report issued by the Foundation for Taxpayer and Consumer Rights entitled, “False Accounting: How Medical Malpractice Insurance Companies Inflate Losses to Justify Sudden Surges in Rates and Tort Reform.”

Harvey Rosenfield, consumer activist and author of “False Accounting,” analyzed selective data to conclude that medical malpractice insurers overstated their loss projections by $15 billion between 1995 and 2003. Hoyt and Powell demonstrate that losses for this period are actually understated by $4.3 billion, with actual payments in 1998 and 1999 already exceeding initial loss estimates.

“The consumer groups’ reports have been intentionally crafted in an attempt to fool Congress and the media into believing that the current medical liability system works,” said Smarr. “But the system best serves lawyers and leaves real victims waiting years for compensation.”

A second new research report, entitled “Observations on February 28, 2006 Report by Americans for Insurance Reform (AIR)” and authored by actuaries James Hurley and Gail Tverberg of Tillinghast Towers Perrin, finds that past rate increases reflect the claims experience of insurers and that recent tort reforms have had a material effect on rates.

In the AIR study, “Insurance ‘Crisis’ Officially Over - Medical Malpractice Rates Have Been Stable for a Year,” authors J. Robert Hunter and Joanne Doroshow rely on survey data published by the Council of Insurance Agents and Brokers (CIAB) to conclude that insurance rates are no longer rising, and that state tort reforms have had no effect.

The contents of this report were rebutted not only by Hurley and Tverberg, but also by the CIAB. While Hurley and Tverberg agree that rates may have flattened for the time being, they conclude that current rates for physicians may be unsustainable in the long run and that a lack of new entrants into the malpractice insurance market suggests that the current rate level may be too low to compensate for underlying risks.

The Hoyt & Powell and Tillinghast studies were funded by the PIAA in response to the consumer group studies.

Copies of the reports may be found at: www.piaa.us.

The PIAA is an association of doctor/provider owned and/or operated medical liability insurance companies which insure over 60 percent of America’s private practicing physicians as well as dentists, hospitals, and other healthcare providers.