Is the medmal crisis over?

It depends on who you ask. For insurers, the financial crisis may be over. An analysis of 48 physician insurers' financial results showed "a flattening of premium at high levels, significant surplus growth and reasonable risk-based capital ratios" in 2005, according to Medical Liability Monitor (5/2006).

Specifically, the industry saw its third straight year of double-digit surplus growth. Surplus growth was 12.1% in 2005, 15.6% in 2004, and 11% in 2003. Moreover, risk-based capital ratios-the minimum capital needed for an insurer to support its operations in view of its risk exposure-was slightly stronger than it was at the end of the last soft market in 2001. It was 493.9% in 2005, and 479.5% in 2004. Finally, premium growth for the industry was only about 1% in 2005. In comparison, premium growth was 8.3% in 2004, 6.8% in 2003, and 26.7% in 2002.

"From the insurance companies' standpoint, the acute part of the financial crisis has passed," says Chad Karls, principal and consulting actuary of the analysis. "However, that's different than saying the medmal crisis is over because physicians are still paying very high rates."