What internists are paying for malpractice coverage

For doctors buying malpractice coverage, the good news is that rate increases seem to be leveling off. Put another way, the bad news isn't as bad as it was last year. Although premiums continued to rise in 2005, the increases were generally lower than in recent years and in some states the cost of insurance actually went down, according to the latest rate survey reported by Medical Liability Monitor, a monthly newsletter that covers the malpractice insurance industry. (The survey results include responses from 46 companies, representing more than two-thirds of the market.) As MLM puts it, "It seems the worst is over."

Where rates are highest

Why the improvement in the rate picture? One reason is more competition. More companies are aggressively seeking new business and expanding into more states. In states that saw premiums drop, rate decreases may be due to tort reform legislation, particularly when it includes caps on noneconomic damages. In Texas, for example, which enacted such reforms in 2003, all the leading malpractice carriers reported either no change or a decrease in premiums for 2005. One company there cut its rates by 10 percent for all specialties throughout the state.

Where rates are lowest

That "good" news may be cold comfort for many doctors, however, particularly those who practice in big cities where rates are typically highest. Internists in Chicago, for instance, are paying as much as $65,887, an increase of 12.6 percent from 2004. In Detroit, the top rate is $52,754, though that's 17.4 percent less than the same company charged last year. In Cleveland, the highest rate is $43,416, a 24.1 percent jump from the previous year.

The country's highest liability premiums are in Miami, where top rates are about $75,000 for internists and nearly $300,000 for general surgeons and ob/gyns. Those rates are somewhat misleading, however, since they're for policy limits of $1 million/$3 million, which few Florida physicians actually buy. Most pay much less, typically for coverage of only $250,000/$750,000.

Even in states where premiums are much lower—in the $10,000 to $25,000 range—many doctors did face sharp price increases this year. Some carriers raised rates for internists by 30 percent or more in Colorado, Delaware, Nebraska, New Hampshire, North Carolina, Oklahoma, South Dakota, Tennessee, and Wyoming.

Nonetheless, there are still plenty of places where doctors pay relatively modest premiums. In Idaho, Minnesota, Nebraska, and South Dakota, for example, some carriers offer internists rates of less than $4,000. Even in states with astronomical big-city rates, internists who practice elsewhere pay considerably less. In Illinois, for instance, the lowest available rate—about $20,000—is less than a third of the top rate in Chicago. In Michigan, the most expensive rate in Detroit is five times higher than the lowest rate elsewhere in the state.